In: Finance
Compute the NPV statistic for Project Y if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)
Project Y | |||||
Time: | 0 | 1 | 2 | 3 | 4 |
Cash flow: | –$8,300 | $3,690 | $4,520 | $1,860 | $640 |
Should the project be accepted or rejected?
NPV is $ 474.46
The project should be accepted.
Year | Cash flow | Discount factor | Present Value |
a | b | c=1.11^-a | d=b*c |
0 | $ -8,300 | 1.0000 | $ -8,300.00 |
1 | 3,690 | 0.9009 | 3,324.32 |
2 | 4,520 | 0.8116 | 3,668.53 |
3 | 1,860 | 0.7312 | 1,360.02 |
4 | 640 | 0.6587 | 421.59 |
NPV | $ 474.46 |