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Economic Analysis: Net Present Value

What would be the present value of an item that has a salvage value of $25,000 at the end of five years? Assume a discount rate of 3.8% for an end-of-year factor. Carry calculations to four decimal places.

A - $24,085

B - $24,050

C - $25,950

D - $20,747

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Thanks for your question!

Please see the attached MS Word and Excel documents for correct formatting of the charts.

To answer this question we first need to understand the concept of Net Present Value. Since money now is always worth more than money one year from now, we ...

Solution Summary

How to calculate the value of an item with a known salvage value at the end of 5 years and a given discount rate.