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Assume a present value of equity of $1,716,969; an initial cash outlay of $1,600,000; available financing...

Assume a present value of equity of $1,716,969; an initial cash outlay of $1,600,000; available financing of $10,240,000, and improvement costs of $3,840,000. What is the net present value of this investment?

1)

 $11,956,969

2)

 $116,969

3)

 $6,400,000

4)

 $14,196,969
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Answer #1

Answer is $116,969

Present Value of Equity = $1,716,969
Initial Cash Outlay = $1,600,000

Net Present Value = Present Value of Equity - Initial Cash Outlay
Net Present Value = $1,716,969 - $1,600,000
Net Present Value = $116,969

So, net present value of this investment is $116,969

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