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A $350,000 capital investment proposal has an estimated life of four years and no residual value. The estimated net cash flows are as follows:

Year Net Cash Flow Year Net Cash Flow
1 $150,000 3 $104,000
2 130,000 4 90,000

The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is .893, .797, .712, and .636, respectively. Determine the net present value.

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M991734

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