The following table shows the receipts and disbursements for a given venture. De
ID: 2701794 • Letter: T
Question
The following table shows the receipts and disbursements for a given venture. Determine the desirability of the venture for a 14% interest rate, based on the present equivalent comparison and the annual equivalent comparison.
End of the Year Receipts($) Disbursements($)
0 0 20,000
1 6,000 0
2 5,000 4,000
3 5,000 0
4 12,000 1,000
Explanation / Answer
NPV = -20000 + 6000/1.14 + 1000/1.14^2 + 5000/1.14^3 + 11000/1.14^4 = -4079.634
annual equivalent cost = -1400.15
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.