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Moates Corporation has provided the following data concerning an investment project that it is considering: Initial investment $ 390,000 Annual cash flow $ 136,000 per year Expected life of the project 4 years Discount rate 9 %. The net present value of the project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.) a. $(50,504) b. $50,504 c. $390,000 d. $(254,000)

Respuesta :

Answer:

Ans. the net present value is exactly $50,602, so it is closer to b) $50,504

Explanation:

Hi, to find the net present value of this problem, we have to use the following formula.

[tex]NPV=-Investment+\frac{AnnualCashFlow((1+rate)^{n}-1) }{rate(1+rate)^{n} }[/tex]

Therefore

[tex]NPV=-390000+\frac{136000((1+0.09)^{4}-1) }{0.09(1+0.09)^{4} } =50601.9=50602[/tex]

So the answer is b) $50,504

Best of luck

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