firm undertakes a five-year project that requires an initial capital investment of $125,000. The project is then expected to provide cash flow of $15,000 per year for the first two years, $55,000 in the third and fourth years, and $16,000 in the fifth year. The project has an end-of-life salvage value of $7,000.
firm undertakes a five-year project that requires an initial capital investment of $125,000. The project is then expected to provide cash flow of $15,000 per year for the first two years, $55,000 in the third and fourth years, and $16,000 in the fifth year. The project has an end-of-life salvage value of $7,000.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A firm undertakes a five-year project that requires an initial capital investment of $125,000. The project is then expected to provide cash flow of $15,000 per year for the first two years, $55,000 in the third and fourth years, and $16,000 in the fifth year. The project has an end-of-life salvage value of $7,000.
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If the discount rate applied to these cash flows is 8.25 percent, to the nearest dollar, the net present value of this project is $
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