COTB MC Qu. 14-57 (Algo) Assume that a company is considering... Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment Working capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $ 210,000 $ 50,000 $ 100,000 $ 40,000 $ 25,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The working capital will be released at the end of the project and the company's required rate of return is 18%. The net present value of the project is closest to: Multiple Choice $33,240. $23,340. B
COTB MC Qu. 14-57 (Algo) Assume that a company is considering... Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows: Cost of new equipment Working capital required Annual net cash inflows Maintenance and repairs in third year Salvage value of equipment in fourth year $ 210,000 $ 50,000 $ 100,000 $ 40,000 $ 25,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. The working capital will be released at the end of the project and the company's required rate of return is 18%. The net present value of the project is closest to: Multiple Choice $33,240. $23,340. B
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:COTB MC Qu. 14-57 (Algo) Assume that a company is considering...
Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows:
Cost of new equipment
Working capital required
Annual net cash inflows
Maintenance and repairs in third year
Salvage value of equipment in fourth year
$ 210,000
$ 50,000
$ 100,000
$ 40,000
$ 25,000
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.
The working capital will be released at the end of the project and the company's required rate of return is 18%. The net present value of the project is
closest to:
Multiple Choice
$33,240.
$23,340.
B
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