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nikdorinn [45]
3 years ago
12

The Allied Corporation analyzes a project that requires an immediate investment of $440. Allied estimates that at the end of the

first year the project will generate a cash flow of $660, but that at the end of the second year, when the project ends, it will generate a negative cash flow of $85. The project's required rate of return is estimated to be 7.50%. Calculate the NPV of Allied's project.
Business
1 answer:
olga_2 [115]3 years ago
8 0

Answer:

NPV = $100.4002 rounded off to $100.40

Explanation:

The NPV or net present value is the present value of a project or business's cash flows which are calculated by deducting the cash outflows from the cash inflows. NPV is a tool or criteria used for investment and project appraisal. The NPV can be calculated as follows,

NPV = CF1 / (1+r)  +  CF2 / (1+r)^2  +  ....  +  CFn / (1+r)^n   -   Initial Outlay

Where,

  • CF1, CF2, ... represents the cash flows in Year 1, Year 2 and so on.
  • r represents the discount rate

NPV = 660 / (1+0.075)  +  [ -85 / (1+0.075)^2]  -  440

NPV = $100.4002 rounded off to $100.40

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Answer: 0.67

Explanation:

From the question, we are informed that Levine Inc. is considering an investment that has an expected return of 15% and a standard deviation of 10%.

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3 0
3 years ago
A company purchased $270,000 in supplies during the year. The supplies account increased by $10,000 during the year to an ending
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Answer:

$260,000

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Opening balance = Ending balance - Increase in ending balance

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Let illustrate what you you know about materiality concept.
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5 0
2 years ago
Arbor Corporation reports the following: Sales revenue $183,000; ending inventory $12,600; beginning inventory $15,600; purchase
spin [16.1K]

Answer: Cost of goods sold = $62500

Explanation:

Given that,

Sales revenue = $183,000

Ending inventory = $12,600

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3 years ago
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