ASSIGNMENT
Use the following table in performing the subsequent Net Present Value (NPV) calculations:
|
Present Value of an Annuity of $1 at Compound Interest
|
|
Year
|
6%
|
10%
|
12%
|
15%
|
20%
|
|
1
|
0.943
|
0.909
|
0.893
|
0.87
|
0.833
|
|
2
|
1.833
|
1.736
|
1.69
|
1.626
|
1.528
|
|
3
|
2.673
|
2.487
|
2.402
|
2.283
|
2.106
|
|
4
|
3.465
|
3.17
|
3.037
|
2.855
|
2.589
|
|
5
|
4.212
|
3.791
|
3.605
|
3.353
|
2.991
|
|
6
|
4.917
|
4.355
|
4.111
|
3.785
|
3.326
|
|
7
|
5.582
|
4.868
|
4.564
|
4.16
|
3.605
|
|
8
|
6.21
|
5.335
|
4.968
|
4.487
|
3.837
|
|
9
|
6.802
|
5.759
|
5.328
|
4.772
|
4.031
|
|
10
|
7.36
|
6.145
|
5.65
|
5.019
|
4.192
|
1. A project has an estimated annual net cash flows of $6,800 for five years and is estimated to cost $23,125. Assume a minimum acceptable rate of return of 12%. Determine the net present value of the project.
2. A project has estimated annual net cash flows of $96,200 for four years and is estimated to cost $315,500. Assume a minimum acceptable rate of return of 10%. Determine the net present value of the project.
3. Buckeye Healthcare Corp. is proposing to spend $186,725 on an eight-year project that has estimated net cash flows of $35,000 for each of the eight years. Compute the net present value, using a rate of return of 12%.