Which of the following can cause a run-time error?
2 answers:
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Answer:
$1,747
Explanation:
Given:
Generate Cash flows = $20,000 per year
Salvage value = $10,000
Interest = 10% = 0.10
Computation:
Net present value = PV of cash inflows - PV of cash outflow
= [($20,000 X 6.1446) + ($10,000 X 0.3855)] - $125,000
= [$122,892 + 3855] - $125,000
= $1,747
PV factor (for salvage value)
Inflow PV factor = 6.1446