Question

In: Finance

A project has an initial cost of $64,675, expected net cash inflows of $12,000 per year...

A project has an initial cost of $64,675, expected net cash inflows of $12,000 per year for 10 years, and a cost of capital of 13%. What is the project's NPV?

Solutions

Expert Solution

NPV = PV of Cash Inflows - PV of Cash Outflows

Year CF PVF @13% Disc CF
0 $ -64,675.00     1.0000 $ -64,675.00
1 $ 12,000.00     0.8850 $ 10,619.47
2 $ 12,000.00     0.7831 $    9,397.76
3 $ 12,000.00     0.6931 $    8,316.60
4 $ 12,000.00     0.6133 $    7,359.82
5 $ 12,000.00     0.5428 $    6,513.12
6 $ 12,000.00     0.4803 $    5,763.82
7 $ 12,000.00     0.4251 $    5,100.73
8 $ 12,000.00     0.3762 $    4,513.92
9 $ 12,000.00     0.3329 $    3,994.62
10 $ 12,000.00     0.2946 $    3,535.06
NPV $        439.92


pls comment, if any further assistance is required


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