Exercise A-12 (Algo) Present Value of Cash FlowsStar City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.8.YearNet Cash Flow$ 25,00055, e0085, e0085,000105, e00123This schedule includes all cash inflows from the project, which will also require an immediate $205,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered.Required:a. What is the net present value of the project if the appropriate discount rate is 25 percent?b. What is the net present value of the project if the appropriate discount rate is 15 percent?Complete this question by entering your answers in the tabs below.Required ARequired BWhat is the net present value of the project if the appropriate discount rate is 25 percent? (Round PV factor to 3 decimalplaces. Negative amount should be indicated by a minus sign.)Net present value Exercise A-12 (Algo) Present Value of Cash FlowsStar City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.B.YearNet Cash FlOw$ 25,00055,00085,00085,000105,00023.This schedule includes all cash inflows from the project, which will also require an immediate $205,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered.Required:a. What is the net present value of the project if the appropriate discount rate is 25 percent?b. What is the net present value of the project if the appropriate discount rate is 15 percent?Complete this question by entering your answers in the tabs below.Required ARequired BWhat is the net present value of the project if the appropriate discount rate is 15 percent? (Round PV factor to 3 decimalplaces.)Net present value

Solution:- a)Calculation of Net present value If appropriate discount rate 25% as follows under:-

Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.B. Year 1 2 3 4 Net Cash Flow $ 25,000 55, e00 85, e00 85,000 105, e00 This schedule includes all cash inflows from the project, which will also require an immediate $205,000 cash outlay. The city is tax- exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 25 percent? b. What is the net present value of the project if the appropriate discount rate is 15 percent?

Star City is considering an investment in the community center that is expected to return the following cash flows. Use Exhibit A.B. Year 1 2 3 4 Net Cash Flow $ 25,000 55, e00 85, e00 85,000 105, e00 This schedule includes all cash inflows from the project, which will also require an immediate $205,000 cash outlay. The city is tax- exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 25 percent? b. What is the net present value of the project if the appropriate discount rate is 15 percent?

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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