Below are two potential investment alternatives:

-Assume straight-line amortization in all computations, and ignore income taxes. The net present value in case A is
A) $54,000.
B) $( 472).
C) $ 6,000.
D) $(6,000).

Question

Below are two potential investment alternatives:
  
-Assume straight-line amortization in all computations, and ignore income taxes. The net present value in case A is
A) $54,000. 
B) $( 472). 
C) $ 6,000. 
D) $(6,000).

Quizplus · Accepted Answer

Straight-line amortization does not affect the net present value calculation, which is based on cash flows. The negative sign indicates a negative NPV, suggesting that the project's cash inflows are less than the cash outflows when discounted at the required rate of return.

Below Are Two Potential Investment Alternatives