Morrisey Company has two investment opportunities. Both investments cost $6,800 and will provide the same total future cash inflows. The cash receipt schedule for each investment is given below: $\begin{array}{ccc}
&\text { Investment I}&\text { Investment II }\
\text { Period 1 } & \$ 1,900 & \$ 1,900 \
\text { Period } 2 & 1,900 & 3,080 \
\text { Period } 3 & 2,900 & 4,260\
\text { Period } 4 &\underline{ 5,440} & \underline{2,900} \
\text { Total } &\underline{ \$ 12,140 }& \underline{\$ 12,140}
\end{array}$ What is the net present value of Investment II assuming an 12% minimum rate of return? (PV of $1and PVA of $1) (Do not round intermediate calculations. Round your answer to nearest whole dollar.)

Question

Morrisey Company has two investment opportunities. Both investments cost $6,800 and will provide the same total future cash inflows. The cash receipt schedule for each investment is given below: $\begin{array}{ccc}
&\text { Investment I}&\text {  Investment II }\
\text { Period 1 } & \$ 1,900 & \$ 1,900 \
\text { Period } 2 & 1,900 & 3,080 \
\text { Period } 3 & 2,900 & 4,260\
\text { Period } 4 &\underline{ 5,440} & \underline{2,900} \
 \text { Total } &\underline{ \$ 12,140 }& \underline{\$ 12,140}
\end{array}$ What is the net present value of Investment II assuming an 12% minimum rate of return? (PV of $1and PVA of $1) (Do not round intermediate calculations. Round your answer to nearest whole dollar.)

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the future cash inflows at the given rate of return (12%) and subtracting the initial investment. For Investment II, the NPV is calculated as follows:  NPV = (1900 / 1.12) + (3080 / 1.12^2) + (4260 / 1.12^3) + (2900 / 1.12^4) - 6800 = $2,227.

Morrisey Company Has Two Investment Opportunities What Is the Net Present Value of Investment II Assuming