Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 2

For the following questions, circle the best response.

Using the present value factors in your text, the estimated annual cash inflow from the following investment proposal would be (rounded)

a. $3,800.

b. $3,900.

c. $4,000.

d. $4,100.

e. $4,200.

Step 1 of 2

Net present value:

It is one of the discounted cash flow techniques, in this method involves discounting net cash flow to their present value and then matching that present value with the capital expenditure required by the investment. The difference between these two amounts is net present value.

Simply net Present Value is difference between the present value of cash inflows and initial investment.

The present value of future cash flows for this investment is,