Park Co. is considering an investment that requires immediate payment of $21,705 and provides expected cash inflows of $6,700 annually for four years. Assume Park Co. requires a 7% return on its investments. Required:
What is the net present value of this investment?

The net present value of this investment is $989.32

Explanation:

The Net Present Value is calculated by taking the Present Day (discounted) value of all future net cash flows based on the business cost of capital and subtracting the initial cost of investment.

Input Value   Cash flow

CF0                ($21,705)

CF1                   $6,700

CF2                   $6,700

CF3                   $6,700

CF4                   $6,700

Cost of Capital = 7%

Input the values in a financial calculator we get the result;

Net present value = $989.3154

                              = $989.32

Conclusion :

The net present value of this investment is $989.32

being born in poverty would limit the people's chances, opportunities and benefits.

this happen because of several things, such as:

- poor people tend to gain less access to good education and nutrition. this mean that their chance to obtain high paying jobs would also be limited.

- poor people tend to socialize with other poor people while the rich tend to socialize with other rich people. this means that simply throguh their social circle, rich people would have more business opportunities compared to the poor people.

- rich people tend to have more capital in their disposal. this would benefit them in business since it is far easier for them to fund their business operation compared to poor people.