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cost of equipment (10,000) outflow 1. Ames Co. is planning an investment project of a five-year contract to provide componentNeed help on how to get to the answer. Answer is given.

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Answer #1
Net Present Value $18,431
Calculated as
Year Cash Flow 10% PV Factor Present Value of Cash Flow
Net Purchase of Equipment including working capital = $10000+5000= Now $   (15,000) 1 $    (15,000.00)
Annual Cash Inflow 1-5 $        8,000 3.7908 $      30,326.40
Working capital release 5 $        5,000 0.6209 $         3,104.50
Net Present Value $      18,430.90
or Rounded off to $18,431
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