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
Related questions
Question
Explorer Company is considering the following investment proposal:
| Initial investment: | |
| $28,800 | |
| Working capital | 3,200 |
| Operations (per year for 4 years): | |
| Cash receipts | $20,000 |
| Cash expenditures | 8,800 |
| Disinvestment: | |
| Salvage value of equipment | $2,400 |
| Recovery of working capital | 3,200 |
| Discount rate: | 10 percent |
Additional information for interest rate of 10 percent and four time periods:
| 0.68301 | |
| Present value of an |
3.16987 |
What is the
Select one:
a. $14,658
b. $35,503
c. $3,825
d. $7,327
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