Moates Corporation has provided the following data concerning an investment proj
ID: 2585678 • Letter: M
Question
Moates Corporation has provided the following data concerning an investment project that it is considering:
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
$250,000
$144,128
$(131,000)
$(144,128)
Initial investment $ 250,000 Annual cash flow $ 119,000 per year Expected life of the project 4 years Discount rate 8 %Explanation / Answer
Present value of cash inflows = Annual cash flow * PVIFA (N,I) where N = 4 and I = 8%
= 119000 * PVIFA (4, 8%) = 119000 * 3.3121
= 394135
Net present value = PV of cash inflows - Initial investment = 394135 - 250000
= 144135
Correct choice : 144128