You are considering the following project. Your cost of capital is 8%. The cash flows are...

You are considering the following project. Your cost of capital is 8%. The cash flows are as follow:

Year	0	1	2	3	4
	-1000	300	500	300	300

What is the NPV of the project?

	A.	165
	B.	296
	C.	400
	D.	1400

Expert Solution

Year	Cash flow	PVF @8%	PV
0	(1,000.00)	1.0000	(1,000.0000)
1	300.00	0.9259	277.7700
2	500.00	0.8573	428.6500
3	300.00	0.7938	238.1400
4	300.00	0.7350	220.5000

	NPV	165.0600

Answer is A. NPV 165

NOTE: PV @R % = 1/(1+R)^n where "n" is number of year and "R" is Discounting rate

jeff jeffy answered 1 year ago

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