Pina Colada Inc. recently invested in a project with a 3-year life span. The net present value was $8600 and annual cash
Posted: Mon May 02, 2022 9:39 am
Pina Colada Inc. recently invested in a project with a
3-year life span. The net present value was $8600 and annual
cash inflows were $27000 for year 1; $29000 for year 2;
and $31000 for year 3. The initial investment for the project,
assuming a 15% required rate of return, was
Present Value
of 1 at 15%
PV of an Annuity
of 1 at 15%
Year
1
0.870
0.870
2
0.756
1.626
3
0.658
2.283
a. $67090.
b. $57212.
c. $48646.
d. $54682.
3-year life span. The net present value was $8600 and annual
cash inflows were $27000 for year 1; $29000 for year 2;
and $31000 for year 3. The initial investment for the project,
assuming a 15% required rate of return, was
Present Value
of 1 at 15%
PV of an Annuity
of 1 at 15%
Year
1
0.870
0.870
2
0.756
1.626
3
0.658
2.283
a. $67090.
b. $57212.
c. $48646.
d. $54682.