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A Project Has an Anticipated Stream of Annual Net Receipts

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Essay

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. Compute the net present value of the project, if its price is $80,000 and the applicable discount rate is 9%.


Definitions:

Computing Mean

The process of calculating the average value of a set of numbers by adding them together and dividing by the quantity of numbers.

ΣX / N

The formula for calculating the mean of a set of data, where ΣX is the sum of all data points and N is the number of data points.

Arithmetic Average

Another term for the mean, calculated as the sum of all values divided by the number of values.

Frequency Value

The count of how many times a specific data point or value appears within a dataset.

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