document.write( "Question 955065: In the following question and answer, I am trying to figure out where the \"1.09^3\" number comes from in the NPV solution. What is this and where do I find it? Here is the problem:\r
\n" ); document.write( "\n" ); document.write( "The Techron I costs $222,000, has a three-year life, and has pretax operating costs of $57,000 per year. Use straight-line depreciation to zero over the project’s life and assume a salvage value of $34,000. If your tax rate is 35 percent and your discount rate is 9 percent. Find OCF and NPV:\r
\n" ); document.write( "\n" ); document.write( "OCF = −$57,000(1 − 0.35) + 0.35($222,000/3) = −$11,150\r
\n" ); document.write( "\n" ); document.write( "NPV = −$222,000 − $11,150(PVIFA9%,3) + ($22,100/1.09^3) = −$233,158.68\r
\n" ); document.write( "\n" ); document.write( "Thank you for your help! \n" ); document.write( "

Algebra.Com's Answer #583380 by macston(5194) $\"\"$ $\"About$

You can put this solution on YOUR website!
In your NPV formula, the final term should be something like:
\n" ); document.write( " $\"C%5BT%5D%2F%281%2Br%29%5ET\"$ Or $\"R%5Bt%5D%2F%281%2Bi%29%5Et\"$
\n" ); document.write( "The $\"1.09%5E3\"$ is (1+r)^T ((1+discount rate) to the time power) \n" ); document.write( "

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