A Project Has Estimated Annual Cash Flows of $95,000 for Four

question 129

Essay

A project has estimated annual cash flows of $95,000 for four years and is estimated to cost $260,000. Assume a minimum acceptable rate of return of 10%. Using the following tables determine the (a) net present value of the project and (b) the present value index, rounded to two decimal places.
Below is a table for the present value of $1 at compound interest.

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Definitions:

Evolutionary Stable Strategy

A strategy in game theory that, if adopted by a population in a competitive environment, cannot be invaded by any alternative strategy due to its superior success.

Payoffs

The gains or losses realized as a result of a decision or action in a game or transaction.

Business Dealings

Any activity or transaction between companies or individuals in the conduct of their commerce or trade.

Isolated Town

A settlement that is significantly distant from other populated areas, often facing unique economic and social challenges.