Biology Forums - Study Force

Present value of an Annuity of 1
   Periods   8%   9%   10%
   1   .9259   .9174   .9091
   2   1.7833   1.7591   1.7355
   3   2.5771   2.5313   2.4869
A company has a 10% blended cost of capital and is considering investing in a project that requires an initial cash outlay of $1,230,000. The project expects to generate $500,000 in revenue a year. This equipment has an estimated useful life of 3 years. Assume the revenue is generated at the end of the year. The net present value of this project is
A) $1,243,450
B) $   124,345
C) $1,230,000
D) $     13,450

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