A firm is considering a project with an annual cash flow of $100,000.The project would have an 8-year life, and the company uses a discount rate of 5%.What is the maximum amount the company could invest in the project and have the project still be acceptable?

Question

Quizplus · Accepted Answer

Present value = Cash flow × Discounting factor
= $100,000 × 6.46321 (PVAF, n = 8, 5%)
= $646,321

A Firm Is Considering a Project with an Annual Cash