Homework Chapter 10 Homework HW Score 225 225 P105 similar t

Homework: Chapter 10- Homework HW Score: 22.5%, 22.5 P10-5 (similar to) O Type here to search

Solution

Net present value = present value of cash inflows - present value of cash outflows

Net present value = Annuity * [ 1 - 1 / ( 1 + R)ⁿ] / R - Initial investment

Net present value = 8,000 * [ 1 - 1 / ( 1 + 0.17)²⁵] / 0.17 - 30,000

Net present value = 8,000 * 4.798534 - 30,000

Net present value = 38,388.274 - 30,000

Net present value = $8,388.3

Since it has a positive NPV, we accept the project