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A project will produce cash inflows of $1,750 a year for four years. The project initially...

A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of $8,500. What is the net present value of this project if the required rate of return is 14.75%?

  -$1,306.18

-$935.56

  $5,474.76

  $1,011.40

Solutions

Expert Solution

Particulars Year Cash flows PVF @ 14.75% PV
Cash outflow 0 -10600                  1.00 (10,600.00)
Cash inflow 1 1750                  0.87      1,525.05
Cash inflow 2 1750                  0.76      1,329.02
Cash inflow 3 1750                  0.66      1,158.19
Cash inflow 4 1750                  0.58      1,009.32
Cash inflow 5 8500                  0.50      4,272.24
Net Present Value    (1,306.18)

jeff jeffy answered 1 year ago
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