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Exhibit 8-1
a Project Requires an Initial Investment of $1,500,000 (r=10%)( r = 10 \% )

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Exhibit 8-1
A project requires an initial investment of $1,500,000 and will return $420,000 each year for six years.
Factors: Present Value af an Annuity (r=10%) ( r = 10 \% )
 Year 1 0.9091 Year 2 1.7355 Year 3 2.4869 Year 4 3.1699 Year 5 3.7908 Year 6 4.3553\begin{array} { l l } \text { Year 1 } & 0.9091 \\ \text { Year 2 } & 1.7355 \\ \text { Year 3 } & 2.4869 \\ \text { Year 4 } & 3.1699 \\ \text { Year 5 } & 3.7908 \\ \text { Year 6 } & 4.3553 \end{array}
-Refer to Exhibit 8-1.If taxes are ignored and the required rate of return is 10%,what is the project's net present value (rounded to the nearest dollar) ?

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Definitions:

Net Income

The total earnings of a company after subtracting all costs and expenses from revenue.

Net Cash Flow

The difference between a company's cash inflows and outflows over a period, indicating overall liquidity.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods, leading to exponential growth of the investment or loan.

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

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