In: Finance
Project L costs $50,000, its expected cash inflows are $14,000 per year for 12 years, and its WACC is 14%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
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Computation of NPV | ||||
i | ii | iii=i*ii | ||
year | Cash flow | PVIF @ 14% | present value | |
0 | -50000 | 1.0000 | (50,000.00) | |
1 | 14000 | 0.8772 | 12,280.70 | |
2 | 14000 | 0.7695 | 10,772.55 | |
3 | 14000 | 0.6750 | 9,449.60 | |
4 | 14000 | 0.5921 | 8,289.12 | |
5 | 14000 | 0.5194 | 7,271.16 | |
6 | 14000 | 0.4556 | 6,378.21 | |
7 | 14000 | 0.3996 | 5,594.92 | |
8 | 14000 | 0.3506 | 4,907.83 | |
9 | 14000 | 0.3075 | 4,305.11 | |
10 | 14000 | 0.2697 | 3,776.41 | |
11 | 14000 | 0.2366 | 3,312.64 | |
12 | 14000 | 0.2076 | 2,905.83 | |
29,244.09 | ||||
therefore NPV = | 29,244.09 | |||