The following data pertain to an investment proposal (Ignore income taxes.): Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Question

The following data pertain to an investment proposal (Ignore income taxes.):  Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The net present value of the proposed investment is closest to: (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

Quizplus · Accepted Answer

Using the net present value formula: NPV = Present Value of Cash Inflows - Present Value of Cash Outflows, we can calculate the NPV of the investment proposal.

PV of cash inflows = $80,000 x 3.605 (from Exhibit 14B-1) = $288,400. 
PV of cash outflows = $250,000 x 0.924 (from Exhibit 14B-2) = $231,000. 
NPV = $288,400 - $231,000 = $57,400.

Therefore, the net present value of the proposed investment is $57,400, which is closest to answer choice B ($4,859).

The Following Data Pertain to an Investment Proposal (Ignore Income