Question: Question Content Area Net Present Value A project has estimated annual net cash flows of $15,000 for ten years and is estimated to cost $47,500.

  1. Question Content Area

    Net Present Value

    A project has estimated annual net cash flows of $15,000 for ten years and is estimated to cost $47,500. Assume a minimum acceptable rate of return of 20%. Use the Present Value of an Annuity of $1 at Compound Interest table below.

    Present Value of an Annuity of $1 at Compound Interest
    Year 6% 10% 12% 15% 20%
    1 0.943 0.909 0.893 0.870 0.833
    2 1.833 1.736 1.690 1.626 1.528
    3 2.673 2.487 2.402 2.283 2.106
    4 3.465 3.170 3.037 2.855 2.589
    5 4.212 3.791 3.605 3.353 2.991
    6 4.917 4.355 4.111 3.785 3.326
    7 5.582 4.868 4.564 4.160 3.605
    8 6.210 5.335 4.968 4.487 3.837
    9 6.802 5.759 5.328 4.772 4.031
    10 7.360 6.145 5.650 5.019 4.192

    Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value.

    Net present value of the project (round to the nearest dollar) $fill in the blank 1
    Present value index (rounded to two decimal places) fill in the blank 2

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

eBook Show Me How Question Content Area Net Present Value A project has estimated annual net cash flows of $12,500 for ten years and is estimated to cost $30,000. Assume a minimum acceptable rate of...

Q:

Net Present Value A project has estimated annual net cash flows of $15,000 for ten years and is estimated to cost $42,500. Assume a minimum acceptable rate of return of 6%. Use the Present Value of...

Q:

two part question, thank you! Net Present Value A project has estimated annual net cash flows of $5,000 for six years and is estimated to cost $37.500. Assume a minimum acceptable rate of return of...

Q:

Net Present Value A project has estimated annual net cash flows of $5,000 for ten years and is estimated to cost $40,000. Assume a minimum acceptable rate of return of 6%. Use the Present Value of an...

Q:

ilm/takeAssignment/takeAssignmentMain do?invoker=&takeAssignmentSessionLocator=&inprogress=false Net Present Value A project has estimated annual net cash flows of $11,250 for ten years and is...

Q:

Net Present Value A project has estimated annual net cash flows of $10,000 for ten years and is estimated to cost $32,500. Assume a minimum acceptable rate of return of 20%. Use the Present Value of...

Q:

Net Present Value A project has estimated annual net cash flows of $7,500 for ten years and is estimated to cost $45,000. Assume a minimum acceptable rate of return of 6%. Use the Present Value of an...

Q:

Net Present Value A project has estimated annual net cash flows of $13,750 for ten years and is estimated to cost $37,500. Assume a minimum acceptable rate of return of 6%. Use the Present Value of...

Q:

Net Present Value A project has estimated annual net cash flows of $7,500 for ten years and is estimated to cost $35.000. Assume a minimum acceptable rate of return of 20%. Use the Present Value of...

Q:

Net Present Value A project has estimated annual net cash flows of $13,750 for ten years and is estimated to cost $50,000. Assume a minimum acceptable rate of return of 6%. Use the Present Value of...

Q:

Mitchell Company began operations this year. During this first year, the company produced 300,000 units and sold 250,000 units. Its income statement under absorption costing for its first year of...

Q:

Go to www.irs.gov/irb/(the IRS site containing Internal Revenue Bulletins). Locate the Definition of Terms section in a recent IRB. Differentiate between the following terms as used by the IRS in its...

Q:

Which of the following statements is most correct? a . If a company s ROA is 7 percent, then its ROE must be greater than or equal to 7 percent. b . The BEP and ROA will be the same for a company...

Q:

Concepts in Federal Taxation 2104 (21st edition) Chapter 12 Problem 73 Question helps 73.a. Dump Truck- Deferred gain= $0; Crane- Deferred loss= $0; Basis of Crane= $110,000 b. Deferred gain= $10,000...