A tool was purchased at the start of 2011 for $240M. It returned $65M each year...sold for half price end of 2016. 6% discount rate. NPV, dNCF, & PVR are closest to ($M)?
Solution:
NPV: -240+61+58+55+51+49+46+85 = 165 (A)
dNCF: 153.8+240 = 404
PVR: 164/240 = 0.68.
Since 2/3 of the choices are closest to A, we select (A). Source: 10 ECN 1.
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