A project has an initial cost of $42,450, expected net cash inflows of $12,000 per year...

A project has an initial cost of $42,450, expected net cash inflows of $12,000 per year for 11 years, and a cost of capital of 14%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

Expert Solution

Compuation of NPV
i	ii	iii	iv=ii*iii
year	Cash flow	PVIF @ 14%	present value
0	-42450	1.0000	(42,450.00)
1	12,000	0.8772	10,526.32
2	12,000	0.7695	9,233.61
3	12,000	0.6750	8,099.66
4	12,000	0.5921	7,104.96
5	12,000	0.5194	6,232.42
6	12,000	0.4556	5,467.04
7	12,000	0.3996	4,795.65
8	12,000	0.3506	4,206.71
9	12,000	0.3075	3,690.10
10	12,000	0.2697	3,236.93
11	12,000	0.2366	2,839.41
			22,982.80

Therefore NPV =			22,982.80

jeff jeffy answered 1 year ago

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