Question

Fimbrez Corporation has provided the following data concerning an investment project that it is considering:   Initial...

Fimbrez Corporation has provided the following data concerning an investment project that it is considering:

  Initial investment $210,000
  Annual cash flow $126,000 per year
  Expected life of the project 4 years
  Discount rate 9%

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

The net present value of the project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

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Answer #1

Present value of inflows=$126000*Present value of annuity factor(9%,4)

=$126000*3.240(Approx)

$408240

NPV=Present value of inflows-Present value of outflows

$408240-$210000

$198240(Approx).

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