Engineering Board Exam Reviewer · Rate of Return Analysis · easy

A project costs P100,000 and returns P30,000 at the end of each year for 5 years. Find its net present worth at a minimum attractive rate of return of 12%.

  1. P50,000
  2. P0
  3. P108,143.29
  4. P8,143.29

Answer

D. P8,143.29

Solution

NPW=-100,000+30,000(P/A,12%,5)=-100,000+30,000(3.6048)=P8,143.29. Since it is positive, the project is acceptable.

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