Refer to Present Value Tables Rebecca Requires a Minimum Rate of Return of 8

question 50

Essay

Refer to Present Value Tables. Rebecca Lindsay is considering investing $12,000 in a project with the following cash revenues and cash expenses: $$\begin{array} { l r r } & \text { Revenues } & \text { Expenses } \\\text { Year 1 } & \$ 20,000 & \$ 18,000 \\\text { Year 2 } & \$ 22,000 & \$ 19,000 \\\text { Year 3 } & \$ 22,000 & \$ 20,000 \\\text { Year 4 } & \$ 22,000 & \$ 17,000 \\\text { Year 5 } & \$ 25,000 & \$ 17,000\end{array}$$ Rebecca requires a minimum rate of return of 8%.
Required:
A. Calculate the net cash inflows in each of the five years.
B. Calculate the payback period.
C. Calculate the net present value of the investment.

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Definitions:

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