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Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will...

Aberdeen Outboard Motors is contemplating building a new plant. The company anticipates that the plant will require an initial investment of

$2.06 million in net working capital today. The plant will last 11 ​years, at which point the full investment in net working capital will be recovered. Given an annual discount rate of 6.4%​, what is the net present value of this working capital​ investment?

The NPV is ​$_____ ​(Round to the nearest​ dollar.)

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Expert Solution

Year 0 1 2 3 4 5 6 7 8 9 10 11
Investment in working capital $         -2.06
Recovery of working capital $       2.06
Cash Flow $         -2.06 $           -   $           -   $           -   $           -   $           -   $           -   $           -   $           -   $           -   $           -   $       2.06
Discount Rate 6.40%
NPV $         -1.02

The NPV is $ -1.00 (Rounding to the nearest dollar)

jeff jeffy answered 2 years ago
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