It is said that one of the weaknesses of the accounting rate of return is that it operates on income and not cash flows. Often, as a result, companies will use net present value analysis. If Company X is considering a $35,000 investment with expected cash flows of $6,200 annually over the next 7 years, find their net present value if annual return rate is 9% ? Should they invest.

Answer rating: 100% (QA)

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