Ask Question
15 April, 02:39

Park Co. is considering an investment that requires immediate payment of $21,705 and provides expected cash inflows of $6,700 annually for four years. Assume Park Co. requires a 7% return on its investments.

Required:

What is the net present value of this investment?

+2
Answers (1)
  1. 15 April, 04:27
    0
    The net present value of this investment is $989.32

    Explanation:

    The Net Present Value is calculated by taking the Present Day (discounted) value of all future net cash flows based on the business cost of capital and subtracting the initial cost of investment.

    Input Value Cash flow

    CF0 ($21,705)

    CF1 $6,700

    CF2 $6,700

    CF3 $6,700

    CF4 $6,700

    Cost of Capital = 7%

    Input the values in a financial calculator we get the result;

    Net present value = $989.3154

    = $989.32

    Conclusion:

    The net present value of this investment is $989.32
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Park Co. is considering an investment that requires immediate payment of $21,705 and provides expected cash inflows of $6,700 annually for ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers