Question

Sunland Company accumulates the following data concerning a proposed capital investment: cash cost $208,780, net annual cash flows $44,000, and present value factor of cash inflows for 10 years is 5.02 (rounded). (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45).)
Determine the net present value, and indicate whether the investment should be made.
Net present value $enter the net present value in dollarsThe investment select an optionbe made.

Answer 1

The net present value is 12,100. The investment should be made because NPV is positive

The present value of an investment's after-tax cash flows is known as the investment's net present value.

Businesses can make decisions using the NPV technique. It aids in not only comparing projects of the same size but also in determining whether a given investment is profitable or not.

While the net present value has advantages such as taking time worth of money into an account and assisting management in making better decisions, it also has drawbacks such as not taking hidden costs into account and being unable to be utilized by the company to compare projects of various sizes.

NPV =( Net annual cash flows x present value factor)  - cost

NPV =  (44,000 x 5,02 ) - $208,780 = 12,100

To know more about net present value refer to:  brainly.com/question/17162144

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