Six years ago, Neighborhood Hardware paid a contractor $67,000 to expand the store. At that time, the company calculated a net present value of about $8,200 for the expansion. Now, the company believes that the investment increased annual cash inflows by $10,200 per year for each of the six years. The company has a desired rate of return of 10%. Ignoring income tax considerations, what was the net present value actually achieved for this capital investment? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round your answer to the nearest dollar.

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
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Six years ago, Neighborhood Hardware paid a contractor $67,000 to expand the store. At that time, the company
calculated a net present value of about $8,200 for the expansion. Now, the company believes that the investment
increased annual cash inflows by $10,200 per year for each of the six years. The company has a desired rate of
return of 10%. Ignoring income tax considerations, what was the net present value actually achieved for this capital
investment? (PV of $1 and PVA of $1)
Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round
your answer to the nearest dollar.
Transcribed Image Text:Six years ago, Neighborhood Hardware paid a contractor $67,000 to expand the store. At that time, the company calculated a net present value of about $8,200 for the expansion. Now, the company believes that the investment increased annual cash inflows by $10,200 per year for each of the six years. The company has a desired rate of return of 10%. Ignoring income tax considerations, what was the net present value actually achieved for this capital investment? (PV of $1 and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round your intermediate calculations. Round your answer to the nearest dollar.
Multiple Choice
$(22,576)
$(4,100)
$44,424
$(13,726)
Transcribed Image Text:Multiple Choice $(22,576) $(4,100) $44,424 $(13,726)
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