Question

A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, what is the net present value of the factory? What will the factory be worth at the end of five years?

Name: present values a factory costs 800000 you reckon that it will produce an inflow afteroperating costs of 170000 a year for 10 years if the opportunity cost of capital is 14 whatis the net pre 88828
Uploaded: 2023-06-13T04:02:04-08:00
Duration: 3 min 11 s
Channel: Aarya B
Description: present values a factory costs 800000 you reckon that it will produce an inflow afteroperating costs of 170000 a year for 10 years if the opportunity cost of capital is 14 whatis the net pre 88828

          A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, what is the net present value of the factory? What will the factory be worth at the end of five years?

Added by Derrick T.

Calculus Single Variable

Deborah Hughes-Hallett, Andrew M.… 7th Edition

Chapter 8

Instant Answer

Solved by Expert Aarya B

06/13/2023

Step 1

Calculate the present value of the cash inflows from the factory. To do this, we'll use the formula for the present value of an annuity: PV = C * [(1 - (1 + r)^(-n)) / r] Where PV is the present value, C is the annual cash inflow, r is the discount rate Show more…

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A factory costs $800,000. You reckon that it will produce an inflow after operating costs of $170,000 a year for 10 years. If the opportunity cost of capital is 14%, what is the net present value of the factory? What will the factory be worth at the end of five years?