Question

A project requires outflows of $150,000 today and $50,000 in one year. It is then expected to generate 9 annual cash inflows of $72,000 starting at the end of year 5. If the project's cost of capital is 15%, what is this project's NPV? Round to the nearest cent.

Answer 1

Ans $ 2949.88

Year	Project Cash Flows (i)	DF@ 15%	DF@ 15% (ii)	PV of Project ( (i) * (ii) )
0	-150000	1	1	(1,50,000.00)
1	-50000	1/((1+15%)^1)	0.870	(43,478.26)
2	0	1/((1+15%)^2)	0.756	-
3	0	1/((1+15%)^3)	0.658	-
4	0	1/((1+15%)^4)	0.572	-
5	72000	1/((1+15%)^5)	0.497	35,796.72
6	72000	1/((1+15%)^6)	0.432	31,127.59
7	72000	1/((1+15%)^7)	0.376	27,067.47
8	72000	1/((1+15%)^8)	0.327	23,536.93
9	72000	1/((1+15%)^9)	0.284	20,466.89
10	72000	1/((1+15%)^10)	0.247	17,797.30
11	72000	1/((1+15%)^11)	0.215	15,475.91
12	72000	1/((1+15%)^12)	0.187	13,457.31
13	72000	1/((1+15%)^13)	0.163	11,702.01
		NPV		2,949.88