Answered: Ipswich Corporation is considering an…

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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Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment?

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Q1/ Ipswich Corporation is considering an investment opportunity with the expected net cash
inflows of $300,000 for four years. The residual value of the investment, at the end of four years,
would be $70,000. The company uses a discount rate of 14%, and the initial investment is
$290,000. Calculate the NPV of the investment.
Present value of an ordinary annuity of $1:
12%
13%
14%
15%
1
0.893
0.885
0.877
0.87
1.69
1.668
1.647
2.322
1.626
3
2.402
2.361
2.283
3.037
4
2.974
2.914
2.855
3.605
3.517
3.433
3.352
Present value of $1:
12%
13%
14%
15%
1
0.893
0.885
0.877
0.87
0.797
0.783
0.769
0.756
0.712
0.693
0.675
0.658
4
0.636
0.613
0.592
0.572
0.567
0.543
0.519
0.497
田

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