Question
In: Finance
A company is considering the purchase of a copier that cost $5,000. Assume a required rate...
A company is considering the purchase of a copier that cost
$5,000. Assume a required rate of return of 9% and the following
cash flow schedule:
• Year 1: $2,000
• Year 2: $3,000
• Year 3: $1,000
What is the project's NPV?
Solutions
Expert Solution
| Calculation of NPV | |||
| Time | Cashflow | PVF @9% | PV |
| - | -5000 | 1.00 | -5,000.00 |
| 1.00 | 2000 | 0.9174 | 1,834.86 |
| 2.00 | 3000 | 0.8417 | 2,525.04 |
| 3.00 | 1000 | 0.7722 | 772.18 |
| 132.09 | |||
| NPV is $132.09 | |||
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Question options:
0.63
8.25
1.36
1.01
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