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lidiya [134]
3 years ago
13

Wandering RV is evaluating a capital budgeting project that is expected to generate $36,950 per year during its six-year life. I

f its required rate of return is 10 percent, what is the value of the project to Wandering RV?
Business
1 answer:
7nadin3 [17]3 years ago
7 0

Answer:

the value of the project is $16,096.88

Explanation:

The computation of the value of the project is shown below:

= (Expected amount generated per year × (1 - (1 ++ rate of returm)^-time period )) ÷ rate of return

= $36,950 ×  [1 - 1.1^-6] ÷ 0.1

= $16,0926.88

Hence, the value of the project is $16,096.88

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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A coupon bond, also known as a bearer bond or bond coupon, is a debt obligation that includes semiannual interest coupons. The issuer keeps no record of coupon bond purchasers, and the purchaser's name is not printed on any kind of certificate. Between the time the bond is issued and the time it matures, bondholders receive these coupons.

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