11:52Investment Appraisal (Year 2 Column 2...6.Discount Factor (5%)Year 0-450,000150,0001.00Year 10.952Year 2180,0000.907Year 3250,0000.864Year 4200,0000.823Year 5200,0000.784What is the NPV ?£530,000£298,595£393,4607. Based on NPV which project would youассept?Net Cash FNet Cash FNet CashFProject 1(110,000) (105,000)Project 3(116,000)Project 2Year 0...ActivityChatTeamsAssignmentsMore

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Answered: 6. Discount Factor (5%) Year 0 -450,000…

6. Discount Factor (5%) Year 0 -450,000 1.00 Year 1 150,000 0.952 Year 2 180,000 0.907 Year 3 250,000 0.864 Year 4 200,000 0.823 Year 5 200,000 0.784 What is the NPV ? £530,000 £298,595 £393,460

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

11:52
Investment Appraisal (Year 2 Column 2...
6.
Discount Factor (5%)
Year 0
-450,000
150,000
1.00
Year 1
0.952
Year 2
180,000
0.907
Year 3
250,000
0.864
Year 4
200,000
0.823
Year 5
200,000
0.784
What is the NPV ?
£530,000
£298,595
£393,460
7. Based on NPV which project would you
ассept?
Net Cash F
Net Cash F
Net Cash
F
Project 1
(110,000) (105,000)
Project 3
(116,000)
Project 2
Year 0
...
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