Question

Salem Co. is considering a project that yields annual net cash inflows of $420,000 for years 1 through 5, and a net cash inflow of $100,000 in year 6. The project will require an initial investment of $1,800,000. Salem’s cost of capital is 10 percent. Present value information is presented below:
Present value of $1 for five years at 10 percent is 0.62.
Present value of $1 for six years at 10 percent is 0.56.
Present value of an annuity of $1 for five years at 10 percent is 3.79.
What was Salem’s expected net present value for this project?
a. $83,000
b. ($108,200)
c. ($152,200)
d. ($442,000)


$1.99
Sales0
Views38
Comments0
  • CreatedSeptember 01, 2015
  • Files Included
Post your question
5000