In: Finance
Project L costs $45,000, its expected cash inflows are $11,000 per year for 12 years, and its WACC is 10%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
Computation of NPV | |||
i | ii | iii=i*ii | |
year | Cash flow | PVIF @ 10% | present value |
0 | -45000 | 1.0000 | (45,000.00) |
1 | 11000 | 0.9091 | 10,000.00 |
2 | 11000 | 0.8264 | 9,090.91 |
3 | 11000 | 0.7513 | 8,264.46 |
4 | 11000 | 0.6830 | 7,513.15 |
5 | 11000 | 0.6209 | 6,830.13 |
6 | 11000 | 0.5645 | 6,209.21 |
7 | 11000 | 0.5132 | 5,644.74 |
8 | 11000 | 0.4665 | 5,131.58 |
9 | 11000 | 0.4241 | 4,665.07 |
10 | 11000 | 0.3855 | 4,240.98 |
11 | 11000 | 0.3505 | 3,855.43 |
12 | 11000 | 0.3186 | 3,504.94 |
29,950.61 | |||
Therefore NPV = | 29,950.61 |