The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year: 1 2 3 Cash Flow $ 20,000 33,000 30,000 The firm will also be required to spend $15,000 to close down the project at the end of the three years. a. Compute the net present value if the cost of capital is 9 percent. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places
The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year: 1 2 3 Cash Flow $ 20,000 33,000 30,000 The firm will also be required to spend $15,000 to close down the project at the end of the three years. a. Compute the net present value if the cost of capital is 9 percent. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places
Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 17P: EQUIVALENT ANNUAL ANNUITY A firm has two mutually exclusive investment projects to evaluate; both...
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![Problem 12-15 (Algo) Net present value method [LO12-4]
The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years.
Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Cash Flow
$ 20,000
33,000
30,000
The firm will also be required to spend $15,000 to close down the project at the end of the three years.
a. Compute the net present value if the cost of capital is 9 percent.
Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to
2 decimal places.
Year
1
2
3
Net present value
b. Should the investment be undertaken?
O No
O Yes](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F15d0acc2-386a-4024-9a43-a80a4b105b68%2Faee94bef-cf4b-4c7f-aeb0-edb248866907%2Fsaui7md_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 12-15 (Algo) Net present value method [LO12-4]
The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years.
Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Cash Flow
$ 20,000
33,000
30,000
The firm will also be required to spend $15,000 to close down the project at the end of the three years.
a. Compute the net present value if the cost of capital is 9 percent.
Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to
2 decimal places.
Year
1
2
3
Net present value
b. Should the investment be undertaken?
O No
O Yes
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