A company purchased an asset at a cost of $80,000.Annual operating cash flows are expected to be $30,000 each year for 4 years.At the end of the asset life,there will be no residual (salvage)value.What is the net present value if the cost of capital is 12 percent? (Ignore income taxes. )

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash flows at the cost of capital and subtracting the initial investment. The NPV is $11,120.

A Company Purchased an Asset at a Cost of $80,000