Question

Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $30,000 to purchase equipment. The equipment will have a residual value at the end of its life of $2,000. The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of S24 000 per year for each of the four years. o nes required rate of return is 14% The net present value of this project is closest to: EEB (Click the icon to view the present value of $1 table.) EEB (Click the icon to view the present value of annuity of $1 table.) O A. $41,120. OB. $39,936 O C. $53,360. O D. $20,450.

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Answer #1

PVCO=30000

PVCI=24000*2.9137+2000*0.59208

   =71112.16

NPV=71112.16-30000

   =41112.16

A.$41120

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