Net Present ValueA 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 thePresent Value of an Annuity of $1 at Compound Interest table below.Present Value of an Annuity of $1 at Compound InterestYear6%10%12%15%20%0.89310.9430.9090.8700.83321.8331.7361.6901.6261.5282.4872.6732.4022.2832.1063.4653.0372.58943.1702.8553.79154.2123.6053.3532.99164.9174.3554.1113.7853.3264.56475.5824.8684.1603.6054.96886.2105.3354.4873.8374.77296.8025.7595.3284.0315.6505.019107.3606.1454.192Determine (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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Asked Nov 9, 2019
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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)
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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)

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Step 1

(a)

Determine the net present value of...

Particulars
Workings
$16,765 ($5,000 3.353)
Amount
Present value of future cash flow
$32,500
Less: Initial investment
Net present value of the project
-$15,735|
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Particulars Workings $16,765 ($5,000 3.353) Amount Present value of future cash flow $32,500 Less: Initial investment Net present value of the project -$15,735|

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