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Vanessa Company is evaluating a project requiring a capital expenditure of $480,000. The project has an estimated life of 4 years and no saivage value.
Vanessa Company is evaluating a project requiring a capital expenditure of $480,000. The project has an estimated life of 4 years and no saivage value. The e are as follows: The company's minimum desired rate of return for net present value analysis is 15%. The factors for the present value of $1 at compound interest of 15% for 1 respectively, Determine (a) the average rate of return on investment and (b) the net present value for the project. a. Average rate of return on investment b. Net present value Following is a table for the present value of $1 at compound interest: Following is a tabie for the present value of an annuity of $1 at compound interest: Using the tables provided, if an investment is made now for $20,850 that will generate a cash iafiow of $6,950 a year for the next 4 years, the net present value (rounded to the assuming an earnings rate of 10%, is 4. 520,850 b 57203? c. 96950 4. 51,182
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