A company is considering an iron ore extraction project that requires an initial investment of $508,000 and will yield annual cash inflows of $152,000 for four years. The company's discount rate is 9%. What is the NPV of the project? Present value of an ordinary annuity of $1: 8% 9% 10% 1 2 3 4 5 6 7 8 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 OA $101,600 OB. $15,520 OC. $(15,520) OD. $(101,600) 0.917 1.759 2.531 3.24 3.89 0.909 1.736 2.487 3.17 3.791 4.355 4.868 4.486 5.033 5.535 5.335

A company is considering an iron ore extraction project that requires an initial investment of $508,000 and will yield annual cash inflows of $152,000 for four years. The company's discount rate is 9%. What is the NPV of the project? Present value of an ordinary annuity of $1: 8% 9% 10% 1 2 3 4 5 6 7 8 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 OA $101,600 OB. $15,520 OC. $(15,520) OD. $(101,600) 0.917 1.759 2.531 3.24 3.89 0.909 1.736 2.487 3.17 3.791 4.355 4.868 4.486 5.033 5.535 5.335

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $70000 for 15 years and to have a resale value of $130000 at the end of that period. Assume a 11% rate and earnings at year end. The present value of 1 at 11% for 15 periods is 0.20900. The present value of an ordinary annuity at 11% for 15 periods is 7.19087. The future value of 1 at 11% for 15 periods is 4.78459.
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