A project with an initial investment of $46,000 and cash inflows of $11,000 a year for...

A project with an initial investment of $46,000 and cash inflows of $11,000 a year for six years, calculate NPV given a required return of 12%/year.

Select one:

a. $888

b. -$347

c. -$1,205

d. -$775

e. $1,699

Expert Solution

Ans d. -$775

Year	Project Cash Flows (i)	DF@ 12%	DF@ 12% (ii)	PV of Project ( (i) * (ii) )
0	-46000	1	1	(46,000)
1	11000	1/((1+12%)^1)	0.892857	9,821
2	11000	1/((1+12%)^2)	0.797194	8,769
3	11000	1/((1+12%)^3)	0.711780	7,830
4	11000	1/((1+12%)^4)	0.635518	6,991
5	11000	1/((1+12%)^5)	0.567427	6,242
6	11000	1/((1+12%)^6)	0.506631	5,573
		NPV	(775)

jeff jeffy answered 2 years ago

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