Jiminez Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows: What is the net present value of Investment A's cash flows assuming an 8% minimum rate of return? Use Appendix Table 2. (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.)

Question

Jiminez Company has two investment opportunities. Both investments cost $5,000 and will provide the following net cash flows:  What is the net present value of Investment A's cash flows assuming an 8% minimum rate of return? Use Appendix Table 2. (Do not round your intermediate calculations. Round your answer to the nearest whole dollar.)

Quizplus · Accepted Answer

Net present value = (Expected annual cash flows × PV factor) - Cost of investment
Net present value = ($3,000 × 3.312127) - $5,000 = $4,936 (rounded)
PV factor (n = 4 and i = 8)

Jiminez Company Has Two Investment Opportunities