The Cambro Foundation, a nonprofit organization, is planning to invest $159,040

Question

The Cambro Foundation, a nonprofit organization, is planning to invest $159,040 in a project that will last for three years. The project will produce net cash inflows as follows:

      

  

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table.

   
Required:

Assuming that the project will yield exactly a 7% rate of return, what is the expected net cash inflow for Year 3? (Round discount factor(s) to 3 decimal places.)

  Year 1 $ 50,000   Year 2 $ 66,000   Year 3 ?    

Explanation / Answer

So, third year present Value= $54665.6

So Cash Inflow for 3 years=54665.6/.816=$66967.54

USD$ Year Cah Flow Discount @7% Discounted Amount 0 159040 1 -159040 1 50000 0.9346 46730.00 2 66000 0.8734 57644.40 3 ? 0.8163 0.00 NPV -54665.60

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