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
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Question
With the given information, find the
Transcribed Image Text:Initial Cost: $198,000
Year
Projected
Discount factor at
net cash flow
a 4% rate for each
year.
1
$10,000
0.9615
2
$21,000
0.9246
3
$35,000
0.889
4
$52,000
0.8548
$60,000
0.8219
$60,000
0.7903
7
$62,000
0.7599
8
$64,000
0.7307
LO
Expert Solution
Step 1
The net worth of the project after the deduction of the current worth of the cash outflows from the current worth of the cash inflows is termed as the NPV (net present value) of the project.
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