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Calculate the net present value of the investment

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Q1. Seventeen Seconds, Inc. is considering a long-term investment. The investment will require an investment of $40,000. It will have a useful life of 2 years, and no salvage (i.e., ending) value.

Annual cash savings from the investment are $24,000.

Assume that cash flows other than the initial investment occur at the end of the year, and that the cost of capital (i.e., discount rate) is 10%.

Calculate the net present value of the investment (rounded to the nearest dollar).

Q2. Which of the following capital investment measures does not rely on cash flows?

Q3. Disintegration, Inc. is considering a long-term investment. The investment will require an investment of $72,000. It will have a useful life of 5 years, and no salvage (i.e., ending) value.

Annual cash savings from the investment are $40,000, and annual cash outflows are $16,000.

Assume that cash flows other than the initial investment occur evenly throughout the year.

What is the payback period?

Reference no: EM132907478

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