Net Present Value : The Net Present Value technique is a discount of cash flow method that considers the time value of money in evaluating capital investments. The Net Present Value method uses a specified discount rate to bring all subsequent net cash inflows after the initial investment to their present values. N P V = P r e s e n t v a l u e o f N e t c a s h i n f l o w s − T o t a l Net initial investment Net present value of project A and B.

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The beginning inventory at Smith Co. and data on purchases and sales for a three-month period ending June 30 are... Date Transaction Numberof Units Per Unit Total Apr. 3 Inventory 48 $450 $21,600 8 Purchase 96 540 51,840 11 Sale 64 1,500 96,000 30 Sale 40 1,500 60,000 May 8 Purchase 80 600 48,000 10 Sale 48 1,500 72,000 19 Sale 24 1,500 36,000 28 Purchase 80 660 52,800 June 5 Sale 48 1,575 75,600 16 Sale 64 1,575 100,800 21 Purchase 144 720 103,680 28 Sale 72 1,575 113,400 Record inventory, purchases, cost of merchandise sold data in perpetual invetory record similar to the one illutrated in exhibit 3 using FIFO. Under FIFO if units at two different costs eneter the units with the lower unit cost first in the cost of goods sold unit cost column and in the inventory unit cost column.

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Chapter 14, Problem 7E

To determine

Concept Introduction:

Net Present Value:

The Net Present Value technique is a discount of cash flow method that considers the time value of money in evaluating capital investments.

The Net Present Value method uses a specified discount rate to bring all subsequent net cash inflows after the initial investment to their present values.

NPV=Present value of Net cash inflows−Total Net initial investment

Net present value of project A and B.

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