Present Value of $1 Received at the End of Each Period for n Periods (14) (r)...

 

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Present Value of $1 Received at the End of Each Period for n Periods (14) (r) 1% 1 2 2% 0.990 0980 0.962 0.943 1970 1942 1.886 1.833 4% 6% 8% 10% 0.926 0.909 3 1.783 1.736 2.941 2.884 2.775 2.673 2.577 2.487 3.902 3.808 3.630 3.465 3.312 3.170 Proposal A Initial investment $50,000 Useful life 2 years Differential annual after-tax cash flow $30,000 Proposal B Initial investment $30,000 Useful life 3 years Differential annual after-tax cash flow $15,000 Proposal C Initial investment $80,000 Useful life 4 years Differential annual after-tax cash flow $25,000 Proposal D Initial investment $10,000 Useful life 3 years Differential annual after-tax cash flow $8,000 Based on the NPV method of evaluation, which one of the proposals, outlined above, is the most attractive if the minimum acceptable rate of return is 8%? Present Value of $1 Received at the End of Each Period for n Periods (14) (r) 1% 1 2 2% 0.990 0980 0.962 0.943 1970 1942 1.886 1.833 4% 6% 8% 10% 0.926 0.909 3 1.783 1.736 2.941 2.884 2.775 2.673 2.577 2.487 3.902 3.808 3.630 3.465 3.312 3.170 Proposal A Initial investment $50,000 Useful life 2 years Differential annual after-tax cash flow $30,000 Proposal B Initial investment $30,000 Useful life 3 years Differential annual after-tax cash flow $15,000 Proposal C Initial investment $80,000 Useful life 4 years Differential annual after-tax cash flow $25,000 Proposal D Initial investment $10,000 Useful life 3 years Differential annual after-tax cash flow $8,000 Based on the NPV method of evaluation, which one of the proposals, outlined above, is the most attractive if the minimum acceptable rate of return is 8%?

Answer rating: 100% (QA)

To determine the most attractive proposal based on the net present value NPV method of evaluation we need to calculate the NPV for each proposal using ... View the full answer