Question

Carland, Inc., has a project available with the following cash flows. If the required return for the project is 9.7 percent, what is the project's NPV?

Year	Cash Flow
0	−$276,000
1	87,900
2	110,200
3	126,800
4	78,100
5	−13,800

$31,880.52

$45,680.52

$36,994.00

$54,367.04

$27,895.46

Answer 1

$36,994.00

Working:

Year	Cash flows	Discount factor	Present Value of cash flows
a	b	c=1.097^-a	d=b*c
0	$       -2,76,000	1.0000	$ -2,76,000.00
1	$             87,900	0.9116	$      80,127.62
2	$         1,10,200	0.8310	$      91,573.19
3	$         1,26,800	0.7575	$      96,050.44
4	$             78,100	0.6905	$      53,929.27
5	$           -13,800	0.6295	$       -8,686.52
	Net Present Value		$      36,994.00