Present Value
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Little Giant is building a manufacturing plant that will require a cash outlay of $300,000 for the initial purchase of a building, $450,000 for remodeling the first year, and $710,00 for new equipment in the second year. If the firm's cost of capital is 12 percent, what is the present value of the net investment at time 0?
a. $1,460,000
b. $1,132,070
c. $1,267,720
d. $300,000
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Solution Summary
The solution calculates the present value of thet net investment.
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The correct answer to this question is (c)$1,267,720.
Here is the explanation
You have to calculate three present values and the ...
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