A project has estimated annual net cash flows of $15,000 for seven years and is estimated to cost $40,000. Assume a minimum acceptable rate of return of 10%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value
A project has estimated annual net
|
Present Value of an Annuity of $1 at Compound Interest |
|||||
|
Year |
6% |
10% |
12% |
15% |
20% |
|
1 |
0.943 |
0.909 |
0.893 |
0.870 |
0.833 |
|
2 |
1.833 |
1.736 |
1.690 |
1.626 |
1.528 |
|
3 |
2.673 |
2.487 |
2.402 |
2.283 |
2.106 |
|
4 |
3.465 |
3.170 |
3.037 |
2.855 |
2.589 |
|
5 |
4.212 |
3.791 |
3.605 |
3.353 |
2.991 |
|
6 |
4.917 |
4.355 |
4.111 |
3.785 |
3.326 |
|
7 |
5.582 |
4.868 |
4.564 |
4.160 |
3.605 |
|
8 |
6.210 |
5.335 |
4.968 |
4.487 |
3.837 |
|
9 |
6.802 |
5.759 |
5.328 |
4.772 |
4.031 |
|
10 |
7.360 |
6.145 |
5.650 |
5.019 |
4.192 |
Determine (a) the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
