Question

In: Finance

Project L costs $40,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 11%

Project L costs $40,000, its expected cash inflows are $11,000 per year for 8 years, and its WACC is 11%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

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Solutions

Expert Solution

NPV = -Initial investment + Present value of cash flows

NPV = -$40,000 + $11,000/1.11 + $11,000/1.11^2 + $11,000/1.11^3 + $11,000/1.11^4 + $11,000/1.11^5 + $11,000/1.11^6 + $11,000/1.11^7 + $11,000/1.11^8

NPV = $16,607.35


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