Consider a project with a net investment of $40,000 and the following net cash flows: Annual...

Consider a project with a net investment of $40,000 and the following net cash flows: Annual Cash Flow Year 1 $25,000, Year 2 $36,000, Year 3 $8,000.

If the company's cost of capital is 5%, what would be the net present value of the project? (Using the financial calculator)

Expert Solution

CALCULATION OF THE NET PRESENT VALUE OF THE PROJECT

years	Cash Flow	PVF @ 5%	Present Value
0	$ -40,000	$ 1.0000	$ -40,000.00
1	$ 25,000	$ 0.9524	$ 23,809.52
2	$ 36,000	$ 0.9070	$ 32,653.06
3	$ 8,000	$ 0.8638	$ 6,910.70
	Total		$ 23,373.29

Net Present Value of the Project =			$ 23,373

jeff jeffy answered 1 year ago

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