A project requires a $38.000 initial investment and is expected to generate end-of period annual cash inflows as follows:Year 1Year 2Year 3$17,000 $ 18,000 17,000Assuming a discount rate of 11%, what is the net present value (rounded to the nearest whole dollar) of this investment? Solected present value factors fora single sum are shown in the table below.i- 1181- 1161- 11n 2n 30.90090.81160.7312Multiple Choice$4,355S(10.752)

Net Present Value: It refers to the project's or investment's profitability in absolute terms. It…

Answered: Assuming a discount rate of 1%, what is…

Assuming a discount rate of 1%, what is the net present value (rounded to the nearest whole dollar) of a single sum are shown in the table below.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

A project requires a $38.000 initial investment and is expected to generate end-of period annual cash inflows as follows:
Year 1
Year 2
Year 3
$17,000 $ 18,000 17,000
Assuming a discount rate of 11%, what is the net present value (rounded to the nearest whole dollar) of this investment? Solected present value factors for
a single sum are shown in the table below.
i- 118
1- 116
1- 11
n 2
n 3
0.9009
0.8116
0.7312
Multiple Choice
$4,355
S(10.752)

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