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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. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)

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. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)

FINANCIAL ACCOUNTING
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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Net Present Value A project has estimated annual net cash flows of $15,000 for two years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 6%. 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 12% 15% 20% 1 0.893 0.870 0.833 1.690 1.626 2.402 2.283 3.170 3.037 2.855 3.791 3.605 3.353 4.355 4.111 4.868 4.564 4.160 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.031 7.360 6.145 5.650 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. 2 3 4 5 6 7 8 9 10 6% 0.943 1.833 2.673 3.465 4.212 4.9 5.582 10% 0.909 1.736 2.487 1.528 2.106 2.589 2.991 3.785 3.326 3.605 4.772 5.019 Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
Transcribed Image Text:Net Present Value A project has estimated annual net cash flows of $15,000 for two years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 6%. 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 12% 15% 20% 1 0.893 0.870 0.833 1.690 1.626 2.402 2.283 3.170 3.037 2.855 3.791 3.605 3.353 4.355 4.111 4.868 4.564 4.160 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.031 7.360 6.145 5.650 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. 2 3 4 5 6 7 8 9 10 6% 0.943 1.833 2.673 3.465 4.212 4.9 5.582 10% 0.909 1.736 2.487 1.528 2.106 2.589 2.991 3.785 3.326 3.605 4.772 5.019 Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
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