document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1107722>Question 1107722</A>: <I><SPAN STYLE=\"word-break: break-all;\"> PT Company is considering investing in a particular project. The initial investment cost is $. 200,000. It is expected that the project may generate a benefit for 5 years as shown below:\r<BR>\n" );
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document.write( "Year	       Operating cost	                   Annual cash inflow<BR>\n" );
document.write( "0                       200,000                          --<BR>\n" );
document.write( "1		    15,000		                $. 80,000		<BR>\n" );
document.write( " 2		    18,000		                   50,000<BR>\n" );
document.write( " 3		   14,000		                   30,000<BR>\n" );
document.write( " 4		    2,000		                 40,000<BR>\n" );
document.write( " 5		    1,000	                            45,000	<BR>\n" );
document.write( "Additional information:- A discounting Rate is 9% and  PV for year 0, 1, 3, 4, and 4, and  5  are 1,  0.92, 0.84, 0.77, 0.71 and 0.65 respectively<BR>\n" );
document.write( "Required:<BR>\n" );
document.write( "A.	 Calculate the Net percent Value  of the project <BR>\n" );
document.write( "B.	If you are the project adviser of PT Company would you accept the project or reject? Why?\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #722845 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=722845\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the npv is -45420.\r<BR>\n" );
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document.write( "since this is negative, the project should not be pursued because it doesn't meet the minimum  rate of return requirement of 9%.\r<BR>\n" );
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document.write( "when you do an npv study, the discount rate is the minimum rate of return required in order for the project to be considered profitable.\r<BR>\n" );
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document.write( "i used excel to perform the calculations.\r<BR>\n" );
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document.write( "tp is the time point.<BR>\n" );
document.write( "cost is the operating cost.<BR>\n" );
document.write( "rev is the cash flow in.<BR>\n" );
document.write( "ncf is the net cash flow.<BR>\n" );
document.write( "pvt is the present value factor used.<BR>\n" );
document.write( "pvncf is the present value of the net cash flow.<BR>\n" );
document.write( "npv is the net present value.\r<BR>\n" );
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document.write( "the net cash flow (ncf) is the cash flow in minus the operating cost.\r<BR>\n" );
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document.write( "the present value of the net cash flow (pcncf) is the net cash flow multiplied by the present value factor.\r<BR>\n" );
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document.write( "the net present value (npv) is the sum of the present value of the net cash flow.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2018/012902.jpg\" alt=\"$$$\" >\r<BR>\n" );
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