[3] On January 1, a company invested in an asset with a useful life of 3 years. The company’s expected rate of return is 10%. The cash flow and present and future value factors for the 3 years are as follows: Cash Inflow Present Future Value Value Year from the Asset of $1 at of $1 at 10% 10% 1 $ 8,000 .91 1.10 2 9,000 .83 1.21 3 10,000 .75 1.33 All cash inflows are assumed to occur at year end. If the asset generates a positive net present value of $2,000, what was the amount of the original investment?

[3] On January 1, a company invested in an asset with a useful life of 3 years. The company’s expected rate of return is 10%. The cash flow and present and future value factors for the 3 years are as follows: Cash Inflow Present Future Value Value Year from the Asset of $1 at of $1 at 10% 10% 1 $ 8,000 .91 1.10 2 9,000 .83 1.21 3 10,000 .75 1.33 All cash inflows are assumed to occur at year end. If the asset generates a positive net present value of $2,000, what was the amount of the original investment?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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