22. A project will not produce any cash flows for two years. Starting in the third...

22.

A project will not produce any cash flows for two years. Starting in the third year, it will produce annual cash flows of $11,900 a year for two years. The project initially costs $43,600. In Year 6, the project will be closed and as a result should produce a final cash inflow of $50,500. What is the net present value of this project if the required rate of return is 8.7 percent?

$5,474.76

$3,935.56

$5,447.76

$7,465.95

$4,802.57

Expert Solution

Year	Cash flow	[email protected]%	Present value
0	$ (43,600)	1.000	$ (43,600.00)
1	$ -	0.920	$ -
2	$ -	0.846	$ -
3	$ 11,900	0.779	$ 9,265.28
4	$ 11,900	0.716	$ 8,523.71
5	$ -	0.659	$ -
6	$ 50,500	0.606	$ 30,613.58

Net present value			$ 4,802.57

jeff jeffy answered 1 year ago

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