28. (Ignore income taxes in this problem.) The following data pertain to an inve

Question

28. (Ignore income taxes in this problem.) The following data pertain to an investment proposal: $48,000 $14,000 Cost of the Investment Annual cost savings Estimated salvage value Life of the project Discount rate 5 years 1()% Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the approprlate discount factor(s) using tables The net present value of the proposed investment is closest to: (Round discount factors) to 3 decimal places, intermediate and final answers to the nearest dollar amount.) O $7.558 O $30,000 $5,074 O $2,484

Explanation / Answer

28 Present value of annual cash flows 53074 =14000*3.791 Present value of salvage value 2484 =4000*0.621 Total Present value 55558 Less: Investment 48000 Net present value 7558 Option 1 is correct 32 Profitability index = Present value of cash inflows/Investment = 92930/61000= 1.52 Option 3 is correct

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