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:YearNet Cash Flow1$150,000 2130,000 3104,000 490,000 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

Answered: A $350,000 capital investment proposal…

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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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

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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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