Question

In: Finance

You have 6 years of after-tax cash flows in the table. Assume the following:

You have 6 years of after-tax cash flows in the table.

Assume the following:

• Initial Investment at Time zero =$1,800

• WACC=9.75%


Compute the NPV of the investment. Round to the second decimal place and DO NOT include the $ special character. Hence, 45.678 would be properly written as 45.68 in this problem.

\begin{tabular}{|r|r|rrrrr|r|r|}\hline Cash Flows & 0 & 1 & 2 & 3 & 4 & 5 \\\hline\end{tabular}

Solutions

Expert Solution

Since the 6th month is missing , so it is assumed to be $520

PVF = 1/(1+WACC)^Year

 

Year Cash Flow PVF At 9.75%

PV

0

-1800

1.000

-1800.000

1

520

0.911

473.804

2

520

0.830

431.712

3

520

0.756

393.360

4

520

0.689

358.414

5

520

0.628

326.573

6

520

0.572

297.561
    NPV

481.42

 

The Net present Value of the investment = $481.42.

The Net present Value of the investment = $481.42.

Junaid answered 2 years ago
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