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.

Junaid answered 1 year ago

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