A company is considering an iron ore extraction project which requires an initial investment of $508,000 and will yield annual cash flows of $154,000 for 4 years.The company's hurdle rate is 9%.What is the NPV of the project?
Present value of annuity of$1.
$$\begin{array} { | c | r | r | r | }
\hline & { 8 \% } &{ 9 \% } & { 10 \% } \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 6.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

Question

A company is considering an iron ore extraction project which requires an initial investment of $508,000 and will yield annual cash flows of $154,000 for 4 years.The company's hurdle rate is 9%.What is the NPV of the project?
Present value of annuity of$1.
$$\begin{array} { | c | r | r | r | } 
\hline & { 8 \% } &{ 9 \% } & { 10 \% } \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 6.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of A company is considering an iron ore extraction project which requires an initial investment of $508,000 and will yield annual cash flows of $154,000 for 4 years.The company's hurdle rate is 9%.What is the NPV of the project?
Present value of annuity of$1.
$$\begin{array} { | c | r | r | r | } 
\hline & { 8 \% } &{ 9 \% } & { 10 \% } \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 6.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

A Company Is Considering an Iron Ore Extraction Project Which