A Project Has an Anticipated Stream of Annual Net Receipts

question 16

Essay

A project has an anticipated stream of annual net receipts of $1,000. Its life is 12 years. No salvage value is expected. What is the net present value of the project, if its price is $6,000 and the applicable discount rate is 12%?

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Definitions:

Capital Balances

The amount of money invested in a business by its owners or shareholders, shown on a company's balance sheet.

Net Income

The total profit of a company after all expenses have been deducted from revenue, indicating the company's financial performance in a given period.

Income Ratio

A financial metric comparing two aspects of a company's income, often used to assess financial health or operational efficiency.

Original Investments

The initial amount of money put into a venture, project, or asset, serving as the basis for generating earnings or losses.