A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows: Year Net Cash Flow 1 $150,000 2 130,000 3 104,000 4 90,000 The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the net present value. $fill in the blank 1
A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows: Year Net Cash Flow 1 $150,000 2 130,000 3 104,000 4 90,000 The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the net present value. $fill in the blank 1
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...
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A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net
Year | Net Cash Flow | |
1 | $150,000 | |
2 | 130,000 | |
3 | 104,000 | |
4 | 90,000 |
The minimum desired
$fill in the blank 1
Expert Solution
Step 1 What is NPV
Net Present Value(NPV) is the difference between the present value of cash inflow and present value of cash outflow.
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