A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash...
50.1K
Verified Solution
Link Copied!
Question
Accounting
A project requires a $42,000 initial investment and is expected to generate end-of-period annual cash inflows of $19,000 for each of three years. Assuming a discount rate of 14%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
i = 14%
i = 14%
i = 14%
n = 1
n = 2
n = 3
0.8772
0.7695
0.6750
Multiple Choice
$0
$4,206
$(15,438)
$2,112
$44,112
Butler Corporation is considering the purchase of new equipment costing $69,000. The projected annual income from the equipment is $2,500, after deducting $23,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 9% return on its investments. The present value of an annuity of $1 for different periods follows:
Periods
9%
1
0.9174
2
1.7591
3
2.5313
4
3.2397
What is the net present value of the machine (rounded to the nearest whole dollar)?
rev: 04_15_2022_QC_CS-303098
Multiple Choice
$58,220.
$(4,452).
$69,000.
$64,548.
$2,500.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
