Question

Moates Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 310,000 Annual cash flow $ 137,000 per year Expected life of the project 4 years Discount rate 11 % Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided. The net present value of the project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Answer 1

Answer:

$115,035

Explanation:

Calculation for what the The net present value of the project is closest to:

First step is to calculate the Present value of annual cash flows

Using this formula

Present value of annual cash flows = Annual Cash Flow * PVA of * (11%, 4 years)

Let plug in the formula

Present value of annual cash flows = $ 137,000 * 3.1024456895909

Present value of annual cash flows =$425,035

Now let calculate the net present value of the project

Net present value of the project =$425,035-$ 310,000

Net present value of the project=$115,035

Therefore the The net present value of the project is closest to: $115,035