Question

In: Finance

Calculate the Net Present Value of the cash flows depicted in the table below using a...

Calculate the Net Present Value of the cash flows depicted in the table below using a cost of capital of {r81d}percent.

year Cash Flow
0 -60
1 40
2 40
3 0

Solutions

Expert Solution

Statement showing Cash flows
Particulars Time PVf 8% Amount PV
Cash Outflows                            -                         1.00                  (60.00)                  (60.00)
PV of Cash outflows = PVCO                  (60.00)
Cash inflows                       1.00                  0.9259                     40.00                     37.04
Cash inflows                       2.00                  0.8573                     40.00                     34.29
Cash inflows                       3.00                  0.7938                            -                              -  
PV of Cash Inflows =PVCI                     71.33
NPV= PVCI - PVCO                     11.33

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