A hospital’s project has the following expected cash flows Year Cash flow 0 ($5,000) 1 $1,000...

A hospital’s project has the following expected cash flows Year Cash flow 0 ($5,000) 1 $1,000 2 $2,000 3 $3,000 If the cost of capital is 12%, should the project be undertaken? Show your calculations

Expert Solution

Project should be rejected
Statement showing Cash flows
Particulars	Time	PVf 12%	Amount	PV
Cash Outflows	-	1.00	(5,000.00)	(5,000.00)
PV of Cash outflows = PVCO				(5,000.00)
Cash inflows	1.00	0.8929	1,000.00	892.86
Cash inflows	2.00	0.7972	2,000.00	1,594.39
Cash inflows	3.00	0.7118	3,000.00	2,135.34
PV of Cash Inflows =PVCI				4,622.59
NPV= PVCI - PVCO				(377.41)

jeff jeffy answered 1 year ago

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