The following information was compiled for Infer-Tech PC Company applying a $500,000 initial investment with an $80,000 operating cost increase per year over a five year period.The company factored in a 15% required rate of return.

Required
Compute the present value of the investment in years 2 and 4.Next,compute the net present value for the investment for the full five years.
A)$17,688;$29,599;$98,952
B)$15,123;$28,588;$103,388
C)$11,015;$22,336;$105,950
D)$15,866;$25,411;$101,990
E)$5,652;$32,652;$85,420

Question

The following information was compiled for Infer-Tech PC Company applying a $500,000 initial investment with an $80,000 operating cost increase per year over a five year period.The company factored in a 15% required rate of return.

Required
Compute the present value of the investment in years 2 and 4.Next,compute the net present value for the investment for the full five years.
A)$17,688;$29,599;$98,952 
B)$15,123;$28,588;$103,388 
C)$11,015;$22,336;$105,950 
D)$15,866;$25,411;$101,990 
E)$5,652;$32,652;$85,420

Quizplus · Accepted Answer

B)[($20,000 × ($1.00/$1.15²)] ~ $15,123 [($50,000 × ($1.00/1.15⁴)] ~$28,588 [($4,348 + $15,123 + $23,013 + $28,588 + $32,316)] = $103,388

The Following Information Was Compiled for Infer-Tech PC Company Applying