Chapter 11 GRADED Homework instructions h Question 2 (ot 7) Save & Ext 1.00 poin

Question

Chapter 11 GRADED Homework instructions h Question 2 (ot 7) Save & Ext 1.00 points M11-7 Calculating Net Present Value, Predicting Internal Rate of Return [LO 11-3, 11-4 Vaughn Company has the following information about a potential capital investment nitial investment Annual cash inflow 5 420,000 $ 87,000 Expected Iifo Cost of capital 14% 1. Calculate the net present value of this project. (Euture Valus tables provided. Round the final answer to nearest whole dollar.) of S1. Present Value. of st. Euture Value Annuity of $1. Present Value Annulty ot $1.) (Use appropriate actorte) from the 6 7 8 9 4 5

Explanation / Answer

Net Present Value = $      10,334 Workings: Years Cash Flow Factor @ 14% Present Value Initial investment 0 $ -4,20,000 1 $       -4,20,000 Annual cash inflows 1 - 9 $      87,000 4.94637 $         4,30,334 Net Present Value $            10,334

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