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Austin Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1, $260,000; Year 2, $360,000; Year 3, $375,000. At the end of Year 3, the residuall value of the investment would be $50,000. The company uses a discount rate of 10%, and the initial investment is $175,000. Calculate the NPV of the investment. (Round intermediary calculatio to the nearest dollar.) Present value of an ordinary annuity $1: 10% 0.909 1.736 2.487 3.170 3.791 1 2 3 4 5 Present value of $1: 10% 12% 0.893 1.690 2.402 3.037 3.605 12% The NPV of the investment is 14% 0.877 1.647 2.322 2.914 3.433 14% 16% 0.862 1.605 2.246 2.798 3.274 16%

Austin Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1, $260,000; Year 2, $360,000; Year 3, $375,000. At the end of Year 3, the residuall value of the investment would be $50,000. The company uses a discount rate of 10%, and the initial investment is $175,000. Calculate the NPV of the investment. (Round intermediary calculatio to the nearest dollar.) Present value of an ordinary annuity $1: 10% 0.909 1.736 2.487 3.170 3.791 1 2 3 4 5 Present value of $1: 10% 12% 0.893 1.690 2.402 3.037 3.605 12% The NPV of the investment is 14% 0.877 1.647 2.322 2.914 3.433 14% 16% 0.862 1.605 2.246 2.798 3.274 16%

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...
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Austin Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1, $260,000; Year 2, $360,000; Year 3, $375,000. At the end of Year 3, the residual value of the investment would be $50,000. The company uses a discount rate of 10%, and the initial investment is $175,000. Calculate the NPV of the investment. (Round intermediary calculations to the nearest dollar.) Present value of an ordinary annuity $1: 10% 12% 0.909 0.893 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.605 1 2 3 4 5 Present value of $1: 10% 12% The NPV of the investment is 14% 0.877 1.647 2.322 2.914 3.433 14% 16% 0.862 1.605 2.246 2.798 3.274 16%
Transcribed Image Text:Austin Corporation is considering an investment opportunity with the following expected net cash inflows: Year 1, $260,000; Year 2, $360,000; Year 3, $375,000. At the end of Year 3, the residual value of the investment would be $50,000. The company uses a discount rate of 10%, and the initial investment is $175,000. Calculate the NPV of the investment. (Round intermediary calculations to the nearest dollar.) Present value of an ordinary annuity $1: 10% 12% 0.909 0.893 1.736 1.690 2.487 2.402 3.170 3.037 3.791 3.605 1 2 3 4 5 Present value of $1: 10% 12% The NPV of the investment is 14% 0.877 1.647 2.322 2.914 3.433 14% 16% 0.862 1.605 2.246 2.798 3.274 16%
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