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Suppose a company has proposed a new 4-year project. The project has an initial outlay of...

Suppose a company has proposed a new 4-year project. The project has an initial outlay of $25,000 and has expected cash flows of $7,000 in year 1, $9,000 in year 2, $12,000 in year 3, and $13,000 in year 4. The required rate of return is 11% for projects at this company. What is the net present value for this project? (Answer to the nearest dollar.)

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Ans $ 5949

Year Project Cash Flows (i) DF@ 11% DF@ 11% (ii) PV of Project ( (i) * (ii) )
0 -25000 1 1                                (25,000)
1 7000 1/((1+11%)^1) 0.900901                                     6,306
2 9000 1/((1+11%)^2) 0.811622                                     7,305
3 12000 1/((1+11%)^3) 0.731191                                     8,774
4 13000 1/((1+11%)^4) 0.658731                                     8,564
NPV                                     5,949

jeff jeffy answered 1 year ago
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