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What is the net present value of a replacement project whose cash flows are -$927,000; $521,000;...
What is the net present value of a replacement project whose cash flows are -$927,000; $521,000; $650,000; and $104,000 for years 0 through 3, respectively? The firm has decided to assume that the appropriate cost of capital is 14.5% p.a. (round to the nearest dollar)
Solutions
Expert Solution
| Year | Cash Flow | PV Factor | PV Of Cash Flow |
| a | b | c=1/1.145^a | d=b*c |
| 0 | $ -9,27,000 | 1 | $ -9,27,000.00 |
| 1 | $ 5,21,000 | 0.873362 | $ 4,55,021.83 |
| 2 | $ 6,50,000 | 0.762762 | $ 4,95,795.27 |
| 3 | $ 1,04,000 | 0.666168 | $ 69,281.44 |
| Net Present value | $ 93,098.54 | ||
jeff jeffy answered 2 years agoRelated Solutions
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