Problem 13-4 NPV with Non-normal Cash Flows (LG13-3) Compute the NPV for Project K if the...

Problem 13-4 NPV with Non-normal Cash Flows (LG13-3) Compute the NPV for Project K if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.) Project K Time: 0 1 2 3 4 5 Cash flow: –$11,900 $5,950 $6,950 $6,950 $5,950 –$14,900

Solutions

Expert Solution

	Computation of NPV
	Year	Cashflows	PVF at 7 %	PV
A	0	$ (11,900)	1.0000	$ (11,900)
	5	$ (14,900)	0.7130	$ (10,623)
		PV of Cash Outflows		$ (22,523)

B	1	$ 5,950	0.9346	$ 5,561
	2	$ 6,950	0.8734	$ 6,070
	3	$ 6,950	0.8163	$ 5,673
	4	$ 5,950	0.7629	$ 4,539
		PV of Cash Inflows		$ 21,844

	NPV	= B-A		$ (680)

jeff jeffy answered 1 year ago

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