Kai winn corporation has provided the following data concerning an investment projectthat it is considering: initial investment$370,000 annual cash flow$121,000 per year expected life of the project4 years discount rate10% question: what is the net present value of the project?
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Ответ:
$13,558
Explanation:
The computation of the Net present value is shown below
= Present value of all annual cash inflows after applying discount factor - initial investment
where,
The Initial investment is $370,000
All yearly cash flows would be
= Annual cash flows × PVIFA for 4 years at 10%
= $121,000 × 3.1699
= $383,558
Refer to the PVIFA table
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
So, the net present value would be
= $383,558 - $370,000
= $13,558
Ответ: