Question

Moates Corporation has provided the following data concerning an investment project that it is considering: Initial...

Moates Corporation has provided the following data concerning an investment project that it is considering:

Initial investment $ 210,000
Annual cash flow $ 126,000 per year
Expected life of the project 4 years
Discount rate 9 %

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the project is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Multiple Choice

  • $(84,000)

  • $210,000

  • $(198,114)

  • $198,114

Business   Accounting   
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Homework Answers

Answer #1

Correct Answer-----$(198,114)

Initial Investment

$      2,10,000.00

Chart values are based on

i=

9%

Year

Cash Inflow

x

Pv Factor

=

Present Value

1

$      1,26,000.00

x

0.917

=

$   1,15,542.00

2

$      1,26,000.00

x

0.842

=

$   1,06,092.00

3

$      1,26,000.00

0.772

$      97,272.00

4

$      1,26,000.00

0.708

$      89,208.00

Present value of cash Inflows

$   4,08,114.00

Present value of Cash Outflow

$   2,10,000.00

Net Present Value

$   1,98,114.00
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