Kipling Company has invested in a project that has an eight-year life.It is expected that the annual cash inflow from the project will be $20,000.Assuming that the project has an internal rate of return of 12%,how much was the initial investment in the project? (Ignore income taxes in this problem.)(Round your PV factor to 5 decimal places and final answer to nearest whole dollar amount.)
A) $64,648.
B) $80,800.
C) $99,353.
D) $160,000.

Question

Quizplus · Accepted Answer

The initial investment can be calculated using the formula for the present value of an annuity. The present value factor for an 8-year annuity at 12% is approximately 4.96764. Multiplying this factor by the annual cash inflow of $20,000 gives an initial investment of approximately $99,353.

Kipling Company Has Invested in a Project That Has an Eight-Year