A business analyst has determined that a project should be worth $2,750,000 in four years if her company decides to pursue the project. Assuming the rate of return on the investment is six percent, wh

The correct answer is C. $2,178,257.57. To find the minimum amount of funds the organization should invest in this project, we need to calculate the present value of the future cash flow, using the formula: where PV is the present value, FV is the future value, r is the interest rate, and n is the number of Plugging in

Strategy Analysis

Question

A business analyst has determined that a project should be worth $2,750,000 in four years if her company decides to pursue the project. Assuming the rate of return on the investment is six percent, what is the minimum amount of funds the organization should invest in this project?

Options

A$2,585,000.00
B$2,749,001.99
C$2,178,257.57
D$165,000

How the community answered

(28 responses)

A
7% (2)
B
18% (5)
C
71% (20)
D
4% (1)

Explanation

To find the minimum amount of funds the organization should invest in this project, we need to calculate the present value of the future cash flow, using the formula: where PV is the present value, FV is the future value, r is the interest rate, and n is the number of Plugging in the given values, we get: PV=(1+0.06)42,750,000 Therefore, the minimum amount of funds the organization should invest in this project is

Topics

#present value#rate of return#financial analysis#investment analysis

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