A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows: Year Net Cash Flow 1 $150,000   2 130,000   3 104,000   4 90,000   The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the net present value. $fill in the blank 1

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows:

Year Net Cash Flow
1 $150,000  
2 130,000  
3 104,000  
4 90,000  

The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the net present value.
$fill in the blank 1

Expert Solution
Step 1 What is NPV

Net Present Value(NPV) is the difference between the present value of cash inflow and present value of cash outflow.

 

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