Question

Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $36,000 to purchase equipment. The equipment will have a residual yalue at the end of its life of $5,000. The useful life of the equipment is 4 years. The new project is expected o generate additional net cash inflows of $19,000 per year for each of the four years. Coyne's required rate of return is 10%. The net present value of this project is closest to: EEB (Click the icon to view the present value of $1 table.) EEB (Click the icon to view the present value of annuity of $1 table.)

A. $24,230.
B. $39,057
C. $10,941.
D. $27,645

Answer 1

Option D. is correct answer. D. $27,645

Step-by-step explanation:

Net Present value = Present value of cash inflow + Present value of residual value - Initial investment

= $19000*3.170 + $5000*0.683 - $36,000

= $27,645