(Ignore income taxes in this problem) Chee Corporation has gathered the followin

Question

(Ignore income taxes in this problem) Chee Corporation has gathered the following data on a proposed investment project Investment required in equipmen$240,000 Annual cash inflows. Salvage value.... $0 8 years 10% Required rate of return The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment. Click here to view Exhibit 13B-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using table The net present value on this investment is closest to: O $240.024 O $26.750 O $58.800 o $160,000

Explanation / Answer

Answer is $26750

Explanation:

Year CASHFLOWS PVF @10% PRESENT VALUE 0 -240000 1 -240000 1 50000 0.909091 45454.55 2 50000 0.826446 41322.31 3 50000 0.751315 37565.74 4 50000 0.683013 34150.67 5 50000 0.620921 31046.07 6 50000 0.564474 28223.7 7 50000 0.513158 25657.91 8 50000 0.466507 23325.37 NPV 26746

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