Hall Corporation plans to invest $5.5 million in rehabilitating a certified historic structure. Calculate the net...

Hall Corporation plans to invest $5.5 million in rehabilitating a certified historic structure. Calculate the net present value of this investment based on Hall's allowable rehabilitation credit. Assume Hall uses a 5 percent discount rate to calculate present value.

Expert Solution

Net Present Value (NPV) = Present Value of Inflows – Present Value of Outflows

Where the cash inflows are the Allowable Rehabilitation Credit of Hall Corporation’s investment that is @20% of $5.5 million for five years.

So cash flows is $1.1m per year for five year

r= rate = 5% or 0.05

n= number of years= 5

PV Inflows =

= $ 4.7624 million

PV Outflows = Investment Value = $ 5.5 million

NPV = PV Inflows – PV Outflows

= 4.7624 – 5.5

= – $0.7376 million

ekkarill92 answered 1 year ago

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