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Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative...

Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Should the project be accepted or rejected?

Project M
Time: 0 1 2 3 4 5
Cash flow: –$1,500 $450 $580 $620 $700 $200

How do you come up with the NPV?

And Should the project be accepted or rejected?

Solutions

Expert Solution

Solution :

The NPV for Project M if the appropriate cost of capital is 9 percent = $ 505.66

The Net Present Value of a project is the present value of its future cash flows discounted at given discount rate minus its initial cash outlay.

Thus, Net Present Value = Present value of future Cash Inflows - Initial Cash outflow

Since the NPV of the project is positive, the project should be accepted.

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 1 month ago
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