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Net Present Value A project has estimated annual net cash flows of $5,000 for five years and is estimated to cost $32,500. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1 0.943 0.909 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 2.487 2.673 2.402 2.283 2.106 3.465 3.037 2.589 4 3.170 2.855 3.791 5 4.212 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.564 7 5.582 4.868 4.160 3.605 4.968 8 6.210 5.335 4.487 3.837 4.772 9 6.802 5.759 5.328 4.031 5.650 5.019 10 7.360 6.145 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)

Net Present Value A project has estimated annual net cash flows of $5,000 for five years and is estimated to cost $32,500. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1 0.943 0.909 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 2.487 2.673 2.402 2.283 2.106 3.465 3.037 2.589 4 3.170 2.855 3.791 5 4.212 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.564 7 5.582 4.868 4.160 3.605 4.968 8 6.210 5.335 4.487 3.837 4.772 9 6.802 5.759 5.328 4.031 5.650 5.019 10 7.360 6.145 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)

Managerial Accounting
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 3BE
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Net Present Value A project has estimated annual net cash flows of $5,000 for five years and is estimated to cost $32,500. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1 0.943 0.909 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 2.487 2.673 2.402 2.283 2.106 3.465 3.037 2.589 4 3.170 2.855 3.791 5 4.212 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.564 7 5.582 4.868 4.160 3.605 4.968 8 6.210 5.335 4.487 3.837 4.772 9 6.802 5.759 5.328 4.031 5.650 5.019 10 7.360 6.145 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
Transcribed Image Text:Net Present Value A project has estimated annual net cash flows of $5,000 for five years and is estimated to cost $32,500. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1 0.943 0.909 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 2.487 2.673 2.402 2.283 2.106 3.465 3.037 2.589 4 3.170 2.855 3.791 5 4.212 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 4.564 7 5.582 4.868 4.160 3.605 4.968 8 6.210 5.335 4.487 3.837 4.772 9 6.802 5.759 5.328 4.031 5.650 5.019 10 7.360 6.145 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
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