Homework Answers
Present value of profit = Profit earned x PVF (i%, n)
= 64,500 x PVF (9%, 1)
= 64,500 x 0.91743
= $59,174 (Rounded to nearest whole dollar)
2.
Present value of cash inflows = Cash inflows x PVF (i%, n)
= 718,500 x PVF (9%, 1)
= 718,500 x 0.91743
= $659,173.455
NPV of the investment = Present value of cash inflows - Investment
= 659,173.455 - 600,000
= $59,173 (Rounded to nearest whole dollar)
| Present value of profit | $59,174 |
| NPV of the investment | $59,173 |
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