An investment that costs $50,000 will return $15,000 operating cash flows per year for five years. Determine
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An investment that costs $50,000 will return $15,000 operating cash flows per year for five years. Determine the net present value of the investment if the required rate of return is 14 percent. Should the investment be undertaken? (Your answer might be slightly different due to rounding. Select the best answer from those available.)
A. Yes, the profit is $25,000.
B. No, the accounting return is less than 14%.
C. No, the net present value is negative at $11,045.
D. Yes, the net present value is positive at $1,496.50.
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
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D Yes the net present value is posi...View the full answer
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Related Book For
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison
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