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Project L costs $45,000, its expected cash inflows are $11,000 per year for 12 years, and...

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.

Solutions

Expert Solution

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

jeff jeffy answered 9 months ago
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