Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7 years and has. $240,000 of cash outflows
Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7 years and has. $240,000 of cash outflows for the same period (before income taxes). The cost of the asset is $700,000 and it will be depreciated using straight-line depreciation over the 7 year life. The asset has no salvage value, Lanyard's tax rate is 40%. The cost of capital is 18%. Factors: Present Value of an Annuity (r= 18%) Year 1 0.8475 Year 2 1.5656 Year 3 2.1743 Year 4 2.6901 Year 5 3.1272 Year 6 3.4976 Year 7 3.8115 What is the net present value of this investment (rounded to the nearest dollar)? Year 6 3.4976 Year 7 3.8115 What is the net present value of this investment (rounded to the nearest dollar)? O None of the answer choices is correct. O 5504,434 O $275,744 O S123,284 O (S105,406)
Step by Step Solution
★★★★★
3.40 Rating (144 Votes )
There are 3 Steps involved in it
Step: 1
Answer 275744 Explanation Step 1 Calculation of Annual Net Cash Flows Particulars Amount Cash I...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started