Spiritlight Ventures is considering the following investment: Investment $140,000 Annual revenues $  96,000 Annual variable costs $  32,000 Annual fixed out-of-pocket costs $  20,000 Salvage value $  12,000 Discount rate 12% Expected life of project 8 years Ignore income taxes. The present value of the annual cash flow (rounded) is a.$152,538. b.$136,822. c.$204,884. d.$218,592.

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
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  1. Spiritlight Ventures is considering the following investment:

    Investment $140,000
    Annual revenues $  96,000
    Annual variable costs $  32,000
    Annual fixed out-of-pocket costs $  20,000
    Salvage value $  12,000
    Discount rate 12%
    Expected life of project 8 years

    Ignore income taxes. The present value of the annual cash flow (rounded) is
    a.$152,538.
    b.$136,822.
    c.$204,884.
    d.$218,592.
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