General Accounting Capstone Investments is considering a project that will produce cashinflows of $11,000 at the end of Year 1, $24,000 in Year 2, and $36,000 inYear 3. What is the present value of these cash inflows at a discount rateof 12 percent?A) $54,578.17.B) $63,494.54.C) $46,564.28.D) $54,868.15.E) $41,997.60.

1. PV = CF / (1 + r)^n2. Given:PV = Present ValueCF = Cash Flowr = Discount Raten = Number of…

Answered: Capstone Investments is considering a…

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 23E: Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The...

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Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
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