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Managerial Accounting: 41. A not-for-profit company purchased an asset at a cost of $60,000. Annual...

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Accounting

Managerial Accounting:

41. A not-for-profit company purchased an asset at a cost of $60,000. Annual operating cash flows are expected to be $20,000 each year for 4 years. At the end of the asset life, there will be no residual (salvage) value. Ignore income taxes. What is the net present value if the cost of capital is 10 percent? a. $(1,960.) b. $3,397. c. $12,400. d. $23,400.

ANS: B $3,397.

Please explain and show all work.

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