(20) ABC can purchase a new assembler for $15,052 that will provide an
annual net cash flow of $6,000 per year for 5 years.  Calculate the
net present value of the assembler if the required rate of return is
12%. (round your answer to the nearest $10)
a) $1,056
b) 4,568
c) 7,621
d) 6,577

Hello k9queen!!

To avoid problems with the formulas (see Questions ID: 159474 and
159477 and the respective clarifications) I will try with a different
presentation of they.

sum[Expression] for i = 1 to n means the summatory of the Expression.

             CFi         
PV = sum [----------]  for i = 1 to n, in this case n = 5;
          (1 + r)^i     

r = 0.12

(1+r) = 1.12      

(1+r)^2 = 1.2544

(1+r)^3 = 1,404928

(1+r)^4 = 1,57351936

(1+r)^5 = 1,7623416832

CFi = $6,000 for i = 1 to 5

then

PV = $6,000 * [1/1.12 + 1/1.254 + 1/1.405 + 1/1.574 + 1/1.762] =

   = $6,000 * (3.6048) = $21,629

NPV = PV - I = $21,629 - $15,052 = $6,577

Then the correct answer is d).


Hope this help.

Regards.
livioflores-ga

Verg good Thank you!
Very specific and fast!