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A Project Has an Anticipated Stream of Annual Net Receipts

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A project has an anticipated stream of annual net receipts of $20,000. Its life is 6 years. No salvage value is expected at the end of the 6 years. If the price of the project is $80,000 and the applicable discount rate is 10%, the net present value of the project is $7,106.


Definitions:

Rate Of Return

The rise or fall in an investment's value over a set period, shown as a percentage of the investment's initial expense.

Annual Dividend

The total amount of dividend that is paid by a company to its shareholders annually, typically represented as a sum of money for each share held.

Market Rate

The prevailing interest rate available in the marketplace on investments, loans, and deposits, reflecting the current cost of borrowing or the return on investment.

Required Return

The minimum annual percentage yield that an investor expects or requires from an investment.

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