Question
Problem 12-14 Net present value method [LO12-4] Aerospace Dynamics will invest $184,000 in a project that will produce the following cash flows. The cost of
Problem 12-14 Net present value method [LO12-4]
Aerospace Dynamics will invest $184,000 in a project that will produce the following cash flows. The cost of capital is 9 percent. (Note that the fourth years cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year | Cash Flow | |||
1 |
| $ | 42,000 |
|
2 |
|
| 54,000 |
|
3 |
|
| 48,000 |
|
4 |
|
| (45,000 | ) |
5 |
|
| 144,000 |
|
a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
b. Should the project be undertaken?
No | |
Yes |
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