Multiple Choice Question 58
Use the following table,
Present Value of an Annuity of 1 | |||
Period | 8% | 9% | 10% |
1 | 0.926 | 0.917 | 0.909 |
2 | 1.783 | 1.759 | 1.736 |
3 | 2.577 | 2.531 | 2.487 |
A company has a minimum required rate of return of 9%. It is
considering investing in a project which costs $350000 and is
expected to generate cash inflows of $150000 at the end of each
year for three years. The net present value of this project is
$29650. |
$75000. |
$379650. |
$37965. |
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Present value of annual cash inflow = PVAIF * Annul cash inflow | ||||||||
=2.531*$150000 | ||||||||
=$379650 | ||||||||
Net Present value = present value of cash inflow - initial investment | ||||||||
=$379650-350000 | ||||||||
=$29650 | ||||||||
Multiple Choice Question 58 Use the following table, Present Value of an Annuity of 1 Period...
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