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Andrews [41]
3 years ago
11

The following present value factors are provided for use in this problem.

Business
1 answer:
DanielleElmas [232]3 years ago
5 0

Answer:

B

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator  

Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.  

When choosing between positive NPV projects, choose the project with the highest NPV first because it is the most profitable.

Cash flow in year 0 = $-42,000,  

Cash flow in year 1 = $14,000

Cash flow in year 2 = $14,000

Cash flow in year 3 = $14,000

Cash flow in year 4 = $18,000

I = 11 %

NPV =  $4,069.

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

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We can plot them on a graph and compare the difference in regards with the above answer.

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