With the given information, find the Net Present Value (NPV). Initial Cost: $198,000YearProjectedDiscount factor atnet cash flowa 4% rate for eachyear.1$10,0000.96152$21,0000.92463$35,0000.8894$52,0000.8548$60,0000.8219$60,0000.79037$62,0000.75998$64,0000.7307LO

The net worth of the project after the deduction of the current worth of the cash outflows from the…

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With the given information, find the Net Present Value (NPV).

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2BE

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

With the given information, find the Net Present Value (NPV).

Initial Cost: $198,000
Year
Projected
Discount factor at
net cash flow
a 4% rate for each
year.
1
$10,000
0.9615
2
$21,000
0.9246
3
$35,000
0.889
4
$52,000
0.8548
$60,000
0.8219
$60,000
0.7903
7
$62,000
0.7599
8
$64,000
0.7307
LO

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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