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love history [14]
3 years ago
8

M Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 380,

000 Annual cash flow $ 133,000 per year Expected life of the project 4 years Discount rate 13 % Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to:
Business
1 answer:
gtnhenbr [62]3 years ago
5 0

Answer:

NPV = $262,604.7

Explanation:

<em>The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite. </em>

NPV of an investment:

NPV = PV of Cash inflows - PV of cash outflow

PV of annuity= 1 -(1+r)^(-n)/r × Annual cash flow

r- discount rate, n- number of years

PV of cashinflow = 133,000 × (1- 1.13^(-4))/0.13 =395,604.6863

NPV  =  395,604.6863  - 133,000= 262,604.7

NPV = $262,604.7

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Answer:

$857

Explanation:

Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.

According to given data

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