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Calculate the Present Value Ratio for the following Investment C, assuming an annual discount rate of...

Calculate the Present Value Ratio for the following Investment C, assuming an annual discount rate of 12%.

C=10,000 C=8,000 C=6,000 I=7,500 I=7,500 ... I=7,500 L=8,000
0 1 2 3 4 ... 10

C: Cost, I:Income, L: Salvage value

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Answer #1

Present Value Ratio = NPV/Presen worth cost

PV =-I t + 〉 Ct/ (1 + r) natial Investmen ー1

NPV = $10,351.06

Present cost worth = Discounted value of cost

Present cost worth = -$21,926.02

Present Value Ratio = 10351.06/21926.02

Present Value Ratio = 0.47

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