Exhibit 8-1
A project requires an initial investment of $1,500,000 and will return $420,000 each year for six years.
Factors: Present Value af an Annuity $( r = 10 \% )$
$\begin{array} { l l } \text { Year 1 } & 0.9091 \ \text { Year 2 } & 1.7355 \ \text { Year 3 } & 2.4869 \ \text { Year 4 } & 3.1699 \ \text { Year 5 } & 3.7908 \ \text { Year 6 } & 4.3553 \end{array}$
-Refer to Exhibit 8-1.Using the net present (NPV)to evaluate this proposal,the company should:

Question

Exhibit 8-1
A project requires an initial investment of $1,500,000 and will return $420,000 each year for six years.
 Factors: Present Value af an Annuity $( r = 10 \% )$
$\begin{array} { l l } \text { Year 1 } & 0.9091 \ \text { Year 2 } & 1.7355 \ \text { Year 3 } & 2.4869 \ \text { Year 4 } & 3.1699 \ \text { Year 5 } & 3.7908 \ \text { Year 6 } & 4.3553 \end{array}$
-Refer to Exhibit 8-1.Using the net present (NPV)to evaluate this proposal,the company should:

Quizplus · Accepted Answer

The NPV is calculated by subtracting the initial investment from the present value of the annuity. The present value of the annuity is found using the factor for Year 6 (4.3553) multiplied by the annual return ($420,000), which equals $1,829,226. Subtracting the initial investment ($1,500,000) from this gives an NPV of $329,226, indicating the proposal is financially viable.

Exhibit 8-1 a Project Requires an Initial Investment of $1,500,000 (r=10%)( r = 10 \% )(r=10%)

Exhibit 8-1
a Project Requires an Initial Investment of $1,500,000 $( r = 10 \% )$