[3] On January 1, a company invested in an asset with a useful life of 3 years. The company's expected rate of return is 10%. The cash flow and present and future value factors for the 3 years are as follows: Cash Inflow Present Future Value Value Year from the Asset of $1 at of $1 at 10% 10% 1 $ 8,000 .91 1.10 2 9,000 .83 1.21 3 10,000 .75 1.33 All cash inflows are assumed to occur at year end. If the asset generates a positive net present value of $2,000, what was the amount of the original investment? A. $30,991 B. $20,250 C. $33,991 D. $22,250
[3] On January 1, a company invested in an asset with a useful life of 3 years. The company's expected rate of return is 10%. The cash flow and present and future value factors for the 3 years are as follows: Cash Inflow Present Future Value Value Year from the Asset of $1 at of $1 at 10% 10% 1 $ 8,000 .91 1.10 2 9,000 .83 1.21 3 10,000 .75 1.33 All cash inflows are assumed to occur at year end. If the asset generates a positive net present value of $2,000, what was the amount of the original investment? A. $30,991 B. $20,250 C. $33,991 D. $22,250
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning