Business, 03.07.2019 09:30 aly5839

Sigma ltd. wants to invest in a project that has an initial investment of $40,000. the project is expected to yield $25,000 every year for the next three years. if the expected rate of return is 15%, what is the net present value (npv) of this project? the npv of the project is $

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Answer from: zoe41

The NPV of the project is $17,080.63.

We follow these steps to arrive at the NPV

We first need to calculate the Present value of the cash flows of each of the years.

Since the project yields $25,000 in each of the three years we can treat the $25,000 as an annuity for 3 years and discount it at 15% to find the Present Value.

We use the following formula for this:

$PV_{Annuity} = C * \left ( \frac{1 -(1+r)^{-n}}{r} \right )$

Substituting the values we get,

$PV_{Annuity} = 25000 * \left ( \frac{1 -(1+0.15)^{-3}}{0.15} \right )$

$PV_{Annuity} = 25000 * \left ( 0.342483768}{0.15} \right )$

$PV_{Annuity} = 25000 * 2.283225117$

$PV_{Annuity} = 57080.62793$

Next, we calculate NPV as follows:

$\mathbf{NPV = PV of cash flows - investment}$

$\mathbf{NPV = 57080.63 - 40000 = USD 17,080.63}$

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

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The federal reserve took an expansionary approach during the crisis. this was done by expanding the money supply and boosting liquidity. this can be seen in the fed's actions of lending to banks, purchasing securities, and lowering the federal funds rate in order to lower overall interest rates. the fed's goal was to increase consumer spending and overall liquidity within the system, and they pursued this by expanding the supply of liquid money.

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Sigma ltd. wants to invest in a project that has an initial investment of $40,000. the project is ex...

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