Question
In: Accounting
A project has an initial investment of $10,000. It will have a net cash inflow of...
A project has an initial investment of $10,000. It will have a net cash inflow of $3,000 per year for 4 years, and no benefits thereafter. Assuming a relevant annual interest rate of 8%, what is the net present value for this project? (round to the nearest dollar, if applicable)
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Expert Solution
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| Period | Cash Flow | PV @ 8% | Present Value | ||
| Initial Investment | 0 | $ -10,000 | 1.0000 | $ -10,000 | |
| Cash Inflow | 1 | $ 3,000 | 0.9259 | $ 2,778 | |
| 2 | $ 3,000 | 0.8573 | $ 2,572 | ||
| 3 | $ 3,000 | 0.7938 | $ 2,381 | ||
| 4 | $ 3,000 | 0.7350 | $ 2,205 | ||
| Net Present Value | $ -64 | ||||
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