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Net Present Value


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#1 bbmak

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Posted 20 May 2013 - 08:53 PM

Question is from the AICPA release question 2013

 

 

Given a 10% discount rate with cash inflows of $3,000 at the end of each year for five years and an initial 
investment of $11,000, what is the net present value?
a.  ($9,500)
b.  $370
c.  $4,000
d.  $11,370
Explanation
Choice "b" is correct.

 

 

Can anybody pease show me how to get the answer?



#2 Dlis2013

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Posted 24 May 2013 - 01:04 AM

Hello,

In order to solve this problem I believe you will need PVOA(Present Value of Ordinary Annuity), get those and multply the $30,000 by the factor (interest rate [i] 10%, Period [n] 5 years) and add what you get to $11,000, and you get the answer. If you need any more assistance PM me. 

 

-Dmitry