Net present value A project has estimated annual net cash flows of $10,000 for 2 years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 12%. 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 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 5.759 5.328 4.772 4.031 6.145 5.650 5.019 4.192 7 8 9 10 5.582 6.210 6.802 7.360 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)
Net present value A project has estimated annual net cash flows of $10,000 for 2 years and is estimated to cost $35,000. Assume a minimum acceptable rate of return of 12%. 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 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.868 4.564 4.160 3.605 5.335 4.968 4.487 3.837 5.759 5.328 4.772 4.031 6.145 5.650 5.019 4.192 7 8 9 10 5.582 6.210 6.802 7.360 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)
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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Transcribed Image Text:Net present value
A project has estimated annual net cash flows of $10,000
for 2 years and is estimated to cost $35,000. Assume a
minimum acceptable rate of return of 12%. 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
6%
10%
12%
15%
20%
0.909
0.893
0.833
1.833
1.736
1.690
2.673 2.487
3.465
3.170
4.212
4.917
5.582
6.210
5.335
4.968
6.802
5.759
5.328
7.360 6.145 5.650
1
2
3
4
5
6
7
8
9
10
0.943
3.791
4.355
4.868
2.402
3.037
3.605
4.111
4.564
0.870
1.626
2.283
2.855
3.353
3.785
4.160
4.487
4.772
5.019
1.528
2.106
2.589
2.991
3.326
3.605
3.837
4.031
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.
Net present value of the project (round to the
nearest dollar)
Present value index (rounded to two decimal
places)
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