Question

reed enterprises is considering a project that has the following cash flow and cost of capital (r) data. What is the project NPV? note that a projects expected NPV can be negative, in which case it will be rejected.

R: 11.00%

Year 0 1 2 3

CF -1,065 $500 $475 $450

Answer 1

Answer:

Year	CF	PV at 11%	Discounted Cash flows
0	-1,065.00	1	-1,065.00
1	500.00	0.9009	450.45
2	475.00	0.8116	385.51
3	450.00	0.7312	329.04
			100.00

Therefore, NPV of the porject is $100.00
Since the NPV is positive, therefore, the project should be accepted.