An investment opportunity requires an initial cash outlay of £30,000. Cash flows are expected to be as follows: Year 1 Year 2 Year 3 Year 4 (£7,000) (£2,000) £13,000 £36,000 The company’s cost of capital is 9%. Depreciation is to be charged annually on a straight line basis over the life of the project. What is the NPV of the project? a. (£2,579) b. £27,421 c. £2,579 d. (27,421)
An investment opportunity requires an initial cash outlay of £30,000. Cash flows are expected to be as follows: Year 1 Year 2 Year 3 Year 4 (£7,000) (£2,000) £13,000 £36,000 The company’s cost of capital is 9%. Depreciation is to be charged annually on a straight line basis over the life of the project. What is the NPV of the project? a. (£2,579) b. £27,421 c. £2,579 d. (27,421)
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 5MCQ: An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second...
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8. An investment opportunity requires an initial cash outlay of £30,000. Cash flows are expected to be as follows:
Year 1 |
Year 2 |
Year 3 |
Year 4 |
(£7,000) |
(£2,000) |
£13,000 |
£36,000 |
The company’s cost of capital is 9%.
What is the
a. (£2,579)
b. £27,421
c. £2,579
d. (27,421)
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