In: Finance
A company is in the process of constructing a new plant at a cost of $16 million. It expects the project to generate cash flows of $9 million, $6 million, and $11 million over the next three years. The cost of capital is 18.9 percent p.a. What is the net present value of this project? (in millions to three decimals)
Year | Cash Flow | PV Factor | PV Of Cash Flow |
a | b | c=1/1.189^a | d=b*c |
0 | $ -16 | 1.00000 | $ -16.000 |
1 | $ 9 | 0.84104 | $ 7.569 |
2 | $ 6 | 0.70735 | $ 4.244 |
3 | $ 11 | 0.59491 | $ 6.544 |
Net Present value | $ 2.358 |