Answered: The net present value of an investment…

The net present value of an investment project is $28,842 and its profitability index is . .2981 . The initial investment in this project was: a $96,750. b $8,598. c $41,092. d $95,200.

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

The net present value of an investment project is $28,842 and its profitability index is . .2981 . The initial investment in this project was:

	a	$96,750.
	b	$8,598.
	c	$41,092.
	d	$95,200.

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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