Question

Project L costs $55,000, its expected cash inflows are $13,000 per year for 10 years, and its WACC is 14%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

Answer 1

Calculation of Net present value:
Time	Cashflow	PVF @14%	PV
-	-55,000	1.00	-55,000.00
1.00	13,000	0.877	11,403.51
2.00	13,000	0.769	10,003.08
3.00	13,000	0.675	8,774.63
4.00	13,000	0.592	7,697.04
5.00	13,000	0.519	6,751.79
6.00	13,000	0.456	5,922.63
7.00	13,000	0.400	5,195.29
8.00	13,000	0.351	4,557.27
9.00	13,000	0.308	3,997.60
10.00	13,000	0.270	3,506.67
			12,809.50
Net present value is $12809.50