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Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $21,000 for 15 years and to have a resale value of $40,000 at the end of that period. Assume a 10% rate and earnings at year end.

Respuesta :

Answer:

$169,303.35

Explanation:

Present value is found by discounting the cash flows at the discount rates.

Present value can be calculated using a financial calculator:

Cash flow each year from year one to fourteen = $21,000

Cash flow in year 15 = $21,000 + $40,000 = $61,000

Discount rate = 10%

NPV = $169,303.35

I hope my answer helps you

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