Answered: The in itial cost of an investment is…

The in itial cost of an investment is $65,000 and thecost of capital is I 0%. The return is $ 16,000 per year for 8 years.What is the net present value?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...

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Question

The in itial cost of an investment is $65,000 and the
cost of capital is I 0%. The return is $ 16,000 per year for 8 years.
What is the net present value?

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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