2D2B FOSTER MANUFACTURING IS ANALYZING A CAPITAL INVESTMENT PROJECT T...
322.
CSO: 2D2a
LOS: 2D2b
Foster Manufacturing is analyzing a capital investment project that is forecasted to
produce the following cash flows and net income.
After-Tax
Net
Years
Cash Flows
Income
0
$(20,000)
$ 0
1
6,000
2,000
2
6,000
2,000
3
8,000
2,000
4
8,000
2,000
If Foster’s cost of capital is 12%, the net present value for this project is
a.
$(1,600).
b.
$924.
c.
$6,074.
d.
$6,998.