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XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000...

XYZ is considering a 3-yr project. The initial outlay is -$120,000, annual cash flow is $50,000 and the terminal cash flow is $10,000. The required rate of return (cost of capital) is 15%. The net present value is $736.42. What if the annual cash flow increases to $54,000 instead? Re-calculate the NPV.

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Expert Solution

Solution :

The NPV of XYZ's 3 - Year project with an annual cash flow of $ 54,000 is = $ 9,869.32

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

The screenshot also contains the NPV calculation of $ 736.42 when the Annual cash flow is $ 50,000.

jeff jeffy answered 4 weeks ago
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