A $550,000 Capital Investment Proposal Has an Estimated Life of 4

question 121

Essay

A $550,000 capital investment proposal has an estimated life of 4 years and no residual value. The estimated net cash flows are as follows: $$\begin{array} { c l } \text { Year } & \text { Net Cash Flow } \\1 & \$ 300,000 \\2 & 280,000 \\3 & 208,000 \\4 & 180,000\end{array}$$ The minimum desired rate of return for net present value analysis is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.
Determine the net present value.

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Definitions:

Deceptive

Deceptive refers to actions or statements that are intended to mislead or trick individuals, often used in contexts involving fraud or misleading advertising.

Reasonable Consumer

A hypothetical individual in legal and marketing contexts who makes purchasing decisions based on an average level of information, attention, and understanding.

Labels

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Accurate

Characterized by being correct in all details; exact and precise.