An investment that costs $20,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, what will the investment generate? (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.) A) A positive net present value of $2,077. B) A negative net present value of $2,077. C) A positive net present value of $22,077. D) A positive net present value of $557.
An investment that costs $20,000 will produce annual cash flows of $5,000 for a period of 6 years. Further, the investment has an expected salvage value of $3,000. Given a desired rate of return of 12%, what will the investment generate? (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.) A) A positive net present value of $2,077. B) A negative net present value of $2,077. C) A positive net present value of $22,077. D) A positive net present value of $557.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 2P
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