A project has estimated annual net cash flows of $6,250 for nine years and is estimated to cost $40,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 10% 12% 15% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.106 3 2.673 2.487 2.402 2.283 4 3.465 3.170 3.037 2.855 2.589 3.353 4.212 3.791 3.605 2.991 3.326 6. 4.917 4.355 4.111 3.785 3.605 5.582 4.868 4.564 4.160 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 5.650 10 7.360 6.145 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
A project has estimated annual net cash flows of $6,250 for nine years and is estimated to cost $40,000. Assume a minimum acceptable rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below. Present Value of an Annuity of $1 at Compound Interest Year 10% 12% 15% 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.106 3 2.673 2.487 2.402 2.283 4 3.465 3.170 3.037 2.855 2.589 3.353 4.212 3.791 3.605 2.991 3.326 6. 4.917 4.355 4.111 3.785 3.605 5.582 4.868 4.564 4.160 6.210 5.335 4.968 4.487 3.837 6.802 5.759 5.328 4.772 4.031 5.650 10 7.360 6.145 5.019 4.192 Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value. Net present value of the project (round to the nearest dollar) Present value index (rounded to two decimal places)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 3BE
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![A project has estimated annual net cash flows of $6,250 for nine years and is estimated to cost $40,000. Assume a minimum acceptable
rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.
Present Value of an Annuity of $1 at Compound Interest
Year
10%
12%
15%
0.943
0.909
0.893
0.870
0.833
1.833
1.736
1.690
1.626
1.528
2.106
3
2.673
2.487
2.402
2.283
4
3.465
3.170
3.037
2.855
2.589
3.353
4.212
3.791
3.605
2.991
3.326
6.
4.917
4.355
4.111
3.785
3.605
5.582
4.868
4.564
4.160
6.210
5.335
4.968
4.487
3.837
6.802
5.759
5.328
4.772
4.031
5.650
10
7.360
6.145
5.019
4.192
Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net
present value.
Net present value of the project (round to the nearest dollar)
Present value index (rounded to two decimal places)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb47a0588-8a50-4a54-9701-ffd0d6e76a5f%2F8a34fe6c-37bd-4a8c-8bc0-8baedcfe66b1%2Fiozcna.png&w=3840&q=75)
Transcribed Image Text:A project has estimated annual net cash flows of $6,250 for nine years and is estimated to cost $40,000. Assume a minimum acceptable
rate of return of 12%. Use the Present Value of an Annuity of $1 at Compound Interest table below.
Present Value of an Annuity of $1 at Compound Interest
Year
10%
12%
15%
0.943
0.909
0.893
0.870
0.833
1.833
1.736
1.690
1.626
1.528
2.106
3
2.673
2.487
2.402
2.283
4
3.465
3.170
3.037
2.855
2.589
3.353
4.212
3.791
3.605
2.991
3.326
6.
4.917
4.355
4.111
3.785
3.605
5.582
4.868
4.564
4.160
6.210
5.335
4.968
4.487
3.837
6.802
5.759
5.328
4.772
4.031
5.650
10
7.360
6.145
5.019
4.192
Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net
present value.
Net present value of the project (round to the nearest dollar)
Present value index (rounded to two decimal places)
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