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Moates Corporation has provided the following data concerning an investment project that it is considering: Initial investmen

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Answer #1

Initial investment = $280,000

Annual cash flow = $128,000

Expected life of project (n) = 4 years

Discount rate (i) = 9%

Present value of cash flows = Annual cash flow x Present value annuity factor (i%, n)

= 128,000 x Present value annuity factor (9%, 4)

= 128,000 x 3.239

= $414,592

Net present value = Present value of cash flows - Initial investment

= 414,592 - 280,000

=$134,592

First option is correct

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