Present value of $1 periods | 4% |6% 8% 10% 112% 14% 0.962 0.943 0.926 0.909 0.8

Question

Present value of $1 periods | 4% |6% 8% 10% 112% 14% 0.962 0.943 0.926 0.909 0.8930.877 0.925 0.890 0.857 0.826 0.7970.769 0.889 0.8400.794 0.751 0.712 0.675 0.855 0.792 0.735 0.683 0.636 0.592 0.822 0.747 0.6810.6210.567 0.519 0.790 0.705 0.630 0.564 0.507 0.456 0.760 0.665 0.583 0.513 0.452 0.400 0.731 0.627 0.540 0.467 0.404 0.351 0.703 0.592 0.500 0.424 0.3610.308 0.676 0.558 0.463 0.386 0.322 0.270 10 Present value of an Annuity of $1 Periods |496 |696 8% 0.962 0.9430.926 0.909 0.893 0.877 1.886 1.833 1.783 1.736 1.690 1.647 2.775 2.673 2.577 2.487 2.402 2.322 3.630 3.465 3.312 3.170 3.037 2.914 4.452 4.212 3.993 3.791 3.605 3.433 6733 6.210 5.747 5.335 4.968 4.639 7.435 6.802 6.247 5.759 5.328 4.946 8.111 7.3606.710 6.145 5.6505.216 10 Figure 13-6 Refer to Figure 13.6. Morgan Clinical Practice is considering an investment in new imaging equipment that will cost $400,000. The equipment is expected to yield cash inflows of $80,000 per year for a six year period. Morgan set a required rate of return at 10%. What is the net present value of the investment? (Note: there may be rounding error depending on the table you use to compute your answer. Choose the answer closest to the one you calculate.) Oa. $348,40o b. $51,600 ??. ($348,600) Od. (551,600) Oe. $451,600

Explanation / Answer

Answer 1-d. ($51,600) Calculation of NPV of Project Particulars Year 10% Factor Amount Present value C D C X D Cash Inflow Net Cash Inflow 1 -6                4.355                  80,000               348,400 A. Total Cash Inflow - PV               348,400 Cash Outflow Cost of Investment 0                1.000                400,000               400,000 B. Total Cash Outflow - PV               400,000 NPV (A - B)               (51,600) Answer 2-a. $4,070 Calculation of NPV of Project Particulars Year 10% Factor Project 2 Amount Present value C D C X D Cash Inflow Net Cash Inflow 1                0.909                    5,000                   4,545 2                0.826                  10,000                   8,260 3                0.751                  15,000                 11,265 A. Total Cash Inflow - PV                 24,070 Cash Outflow Cost of Investment 0                1.000                  20,000                 20,000 B. Total Cash Outflow - PV                 20,000 NPV (A - B)                   4,070

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.