Coyne Corporation is evaluating a capital investment opportunity. This project would require an initial investment of $36,000 t
o purchase equipment. The equipment will have a residual value at the end of its life of $5,000. The useful life of the equipment is 4 years. The new project is expected to generate additional net cash inflows of $19,000 per year for each of the four years. Coyne's required rate of return is 10%. The net present value of this project is closest to:+
1 answer:
Answer:
$27,643
Step-by-step explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
The formula for the NPV can be found in the attached image.
The NPV can be found using a financial calculator:
The cash flow for year zero = $-36,000
Cash flow from year one to three = $19,000
Cash flow for year four =$19,000 + $5,000 = $24,000
I = 10%
NPV = $27,643
I hope my answer helps you
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Douglas invested $ 1300 altogether
<em><u>Solution:</u></em>
Let x represent the amount invested in the account paying 14% interest.
Let y represent the amount invested in the account paying 5% interest
He invests three times as much in an account paying 14% as he does in an account paying 5%
Which means,
x = 3y
<em><u>The simple interest is given by formula:</u></em>
Where,
"p" is the principal
"n" is the number of years
"r" is the rate of interest
<em><u>He earns $152.75 in interest in one year from both accounts combined</u></em>
Therefore,
Combined S.I = 152.75
n = 1 year
<em><u>Considering the account earning 14% interest:</u></em>
<em><u>Considering the account earning 5% interest:</u></em>
<em><u>Since, Combined S.I = 152.75</u></em>
Therefore,
0.42y + 0.05y = 152.75
0.47y = 152.75
Divide both sides by 0.47
y = 325
Therefore,
x = 3y
x = 3(325)
x = 975
<em><u>how much did he invest altogether?</u></em>
Amount invested together = x + y = 975 + 325 = 1300
Thus he invested $ 1300 altogether