156k views
5 votes
Moates 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 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Multiple Choice

$250,000

$144,128

$(131,000)

$(144,128)

User Stanpol
by
7.7k points

1 Answer

3 votes

Answer:

$144,128

Step-by-step explanation:

The net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator:

Cash flow in year 0 = $-250,000

Cash flow each year from year 1 to 4 = $119,000

I = 8%

NPV = $144,143

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

User Albandiguer
by
7.9k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories