Essay
The following data have been gathered for a capital investment decision.
Minimum rate of return for this investment is 14 percent.The present value factors for 14 percent discount rate are given below.
a.Compute the present value of each of the cash inflows of the investment.
b.What would have been the present value of the cash flows if they were received in equal installments over the five-year period at the same discount rate? (Assume the total cash inflows remain same. )
c.If the answers to parts (a)and (b)differ,explain the reason(s)why.
Correct Answer:
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a.
b.$240,000 5 = $48,000 per year
$4...View Answer
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Correct Answer:
Verified
b.$240,000
5 = $48,000 per year$4...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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