Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $150,000 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 2 3 4 5 Cash Flow $ 49,000 60,000 52,000 (60,000) 110,000 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. > Answer is complete but not entirely correct. Net present value $ 40,996.33 X b. Should the project be undertaken? yes ✔ no
Problem 12-14 (Algo) Net present value method [LO12-4] Aerospace Dynamics will invest $150,000 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 2 3 4 5 Cash Flow $ 49,000 60,000 52,000 (60,000) 110,000 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. > Answer is complete but not entirely correct. Net present value $ 40,996.33 X 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
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![Problem 12-14 (Algo) Net present value method [LO12-4]
Aerospace Dynamics will invest $150,000 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
2
3
4
5
Cash Flow
$49,000
60,000
52,000
(60,000)
110,000
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.
> Answer is complete but not entirely correct.
Net present value $ 40,996.33 X
b. Should the project be undertaken?
Ⓒyes
no](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a1e25a2-f5e8-468f-ae64-00ba734492bc%2F54a436ce-211c-4263-a337-541bfd875c92%2Foqru2wn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 12-14 (Algo) Net present value method [LO12-4]
Aerospace Dynamics will invest $150,000 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
2
3
4
5
Cash Flow
$49,000
60,000
52,000
(60,000)
110,000
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.
> Answer is complete but not entirely correct.
Net present value $ 40,996.33 X
b. Should the project be undertaken?
Ⓒyes
no
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