Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment$200,000 Annual net cash flows $50,000 Life of the equipment 10yearsSalvage value$0 Discount rate 10%The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.The net present value of this investment would be:?See separate Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided.
A. $200,000
B. $77,200
C. $107,250
D. $(14,350)
Answer: C
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