Answered

Westonci.ca connects you with experts who provide insightful answers to your questions. Join us today and start learning! Ask your questions and receive precise answers from experienced professionals across different disciplines. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

M Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 250,000 Annual cash flow $ 119,000 per year Expected life of the project 4 years Discount rate 8 % Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:

Sagot :

abiolataiwo2015

Answer:

$144,128

Explanation:

Calculation to determine what net present value of the project is closest to:

Initial investment = $250,000

Annual cash flow = $119,000

Expected life of project (n) = 4 years

Discount rate (i) = 8%

First step is to calculate the Present value of cash flows using this formula

Present value of cash flows = Annual cash flow x Present value annuity factor (i%, n)

Let plug in the formula

Present value of cash flows= 119000 x Present value annuity factor (8%, 4)

Present value of cash flows= 119,000 x 3.312

Present value of cash flows= $394,128

Now let determine the Net present value using this formula

Net present value = Present value of cash flows - Initial investment

Let plug in the formula

Net present value= $394,128 - $250,000

Net present value=$144,128

Therefore net present value of the project is closest to:$144,128

Thanks for stopping by. We are committed to providing the best answers for all your questions. See you again soon. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.