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  1. business
  2. accounting
  3. a project has estimated annual net cash flows of $

A project has estimated annual net cash flows of $5,000 for three years and is...

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Accounting

A project has estimated annual net cash flows of $5,000 for three years and is estimated to cost $50,000. Assume a minimum acceptable rate of return of 15%. Use the Present Value of an Annuity of $1 at the Compound Interest table below.

Present Value of an Annuity of $1 at Compound Interest
Year 6% 10% 12% 15% 20%
1 0.943 0.909 0.893 0.870 0.833
2 1.833 1.736 1.690 1.626 1.528
3 2.673 2.487 2.402 2.283 2.106
4 3.465 3.170 3.037 2.855 2.589
5 4.212 3.791 3.605 3.353 2.991
6 4.917 4.355 4.111 3.785 3.326
7 5.582 4.868 4.564 4.160 3.605
8 6.210 5.335 4.968 4.487 3.837
9 6.802 5.759 5.328 4.772 4.031
10 7.360 6.145 5.650 5.019 4.192

Determine (a) the net present value of the project and (b) the present value index. If required, use the minus sign to indicate a negative net present value.

Net present value of the project (round to the nearest dollar) $fill in the blank 1
Present value index (rounded to two decimal places) fill in the blank 2

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