.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker assignments&tak
ID: 2414647 • Letter: #
Question
.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker assignments&takeAssignmentSessionLocator; Calculator Below is a table for the present value of $1 at Compound interest 6% 0.943 0.890 0.840 0.792 0.747 1096 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 Year Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 0.943 1.833 2.673 3.465 4.212 1096 0.909 1.736 2.487 3.170 3.791 12% 0.893 1.690 2.402 3.037 3.605 Using the tables above, if an investment is made now for $20,700 that will generate a cash inflow of $6 of 10967 a-$20,700 Ob. $21,873 C. $1,173 O d. $6,900Explanation / Answer
Net Present Value [NPV] = Present Value of the annual cash flows – Initial Investment
Present Value of the annual cash flows = Annual Cash Flow x Present Value Annuity Factor
= $6,900 x [ PVIF 10%, 4 Years ]
= $6,900 x 3.170
= $ 21,873
Initial Investment = $20,700
Therefore, Net Present Value [NPV] = Present Value of the annual cash flows – Initial Investment
= $21,873 – 20,700
= $1,173
Hence, The Answer is “ C. $1,173”
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.