An investment project requires an initial cost of $100. The project will provide $ 25 in...

An investment project requires an initial cost of $100. The project will provide $ 25 in the first year and $110 in the second year. What is the NPV of the project if the discount rate is 10%?

		$ 1.13
		$ 13.64
		$ 35
		$ 3.35

Expert Solution

NPV = $ 13.64
Statement showing Cash flows
Particulars	Time	PVf 10%	Amount	PV
Cash Outflows	-	1.00	(100.00)	(100.00)
PV of Cash outflows = PVCO				(100.00)
Cash inflows	1.00	0.9091	25.00	22.73
Cash inflows	2.00	0.8264	110.00	90.91
PV of Cash Inflows =PVCI				113.64
NPV= PVCI - PVCO				13.64

jeff jeffy answered 1 year ago

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