A company is considering an investment that costs $50,000 today. The investment will generate cash inflows of $12,000 per year for 6 years. The company's required rate of return is 8%. What is the Net Present Value (NPV) of the investment? Should the company accept the investment based on NPV? OPTIONS: A) $5,124 B) $7,124 C) $8,124 D) $10,124

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...
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General Finance Question No 121 Please Solve

A company is considering an investment that costs $50,000 today. The investment will generate
cash inflows of $12,000 per year for 6 years. The company's required rate of return is 8%.
What is the Net Present Value (NPV) of the investment? Should the company accept the
investment based on NPV?
OPTIONS:
A) $5,124
B) $7,124
C) $8,124
D) $10,124
Transcribed Image Text:A company is considering an investment that costs $50,000 today. The investment will generate cash inflows of $12,000 per year for 6 years. The company's required rate of return is 8%. What is the Net Present Value (NPV) of the investment? Should the company accept the investment based on NPV? OPTIONS: A) $5,124 B) $7,124 C) $8,124 D) $10,124
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