Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $115,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 12345 Cash Flow $ 38,000 46,000 40,000 (46,000) 85,000 a. What is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. Should the project be undertaken? yes ○ no
Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $115,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year 1 12345 Cash Flow $ 38,000 46,000 40,000 (46,000) 85,000 a. What is the net present value of the project? Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places. Net present value b. Should the project be undertaken? yes ○ no
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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![Problem 12-14 (Algo) Net present value method [LO12-4]
Aerospace Dynamics will invest $115,000 in a project that will produce the following
cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is
negative.) Use Appendix B for an approximate answer but calculate your final answer
using the formula and financial calculator methods.
Year
1
12345
Cash Flow
$ 38,000
46,000
40,000
(46,000)
85,000
a. What is the net present value of the project?
Note: Negative amount should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places.
Net present value
b. Should the project be undertaken?
yes
○ no](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe23feda9-6680-4714-bad5-eb3bad054451%2F3b5e3eb6-b3b0-423c-81b5-1fb5c6fc886b%2Fss441qe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 12-14 (Algo) Net present value method [LO12-4]
Aerospace Dynamics will invest $115,000 in a project that will produce the following
cash flows. The cost of capital is 11 percent. (Note that the fourth year's cash flow is
negative.) Use Appendix B for an approximate answer but calculate your final answer
using the formula and financial calculator methods.
Year
1
12345
Cash Flow
$ 38,000
46,000
40,000
(46,000)
85,000
a. What is the net present value of the project?
Note: Negative amount should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to 2 decimal places.
Net present value
b. Should the project be undertaken?
yes
○ no
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