You have an opportunity to invest$100,000now in return for$80,000in one year and$30,000in two years. If your cost of capital is9.0%,what is the NPV of this investment? You have an opportunity to invest $100,000 now in return for $80,000 in one year and $30,000 in two years. If your cost of capital is 9.0%, what is the NPV of this investment?The NPV willI be $(Round to the nearest cent.)

The NPV is calculated as present value of cash inflows less initial investment

Answered: You have an opportunity to invest…

You have an opportunity to invest $100,000 now in return for $80,000 in one year and $30,000 in two years. If your cost of capital is 9.0%, what is the NPV of this investment?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PB: Bouvier Restaurant is considering an investment in a grill that costs $140,000, and will produce...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

You have an opportunity to invest

$100,000

now in return for

$80,000

in one year and

$30,000

in two years. If your cost of capital is

9.0%,

what is the NPV of this investment?

You have an opportunity to invest $100,000 now in return for $80,000 in one year and $30,000 in two years. If your cost of capital is 9.0%, what is the NPV of this investment?
The NPV willI be $
(Round to the nearest cent.)

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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