In: Finance
Net present value Using a cost of capital of 11%, calculate the net present value for the project shown in the following table and indicate whether it is acceptable,
Initial investment (CF 0CF0) |
negative 1 comma 143 comma 000−1,143,000 |
|
Year (t) |
Cash inflows (CF Subscript tCFt) |
|
1 |
$81,000 |
|
2 |
$138,000 |
|
3 |
$193,000 |
|
4 |
$258,000 |
|
5 |
$311,000 |
|
6 |
$377,000 |
|
7 |
$270,000 |
|
8 |
$98,000 |
|
9 |
$45,000 |
|
10 |
$29,000 |
The net present value (NPV) of the project is _____$ (Round to the nearest cent.)
Is the project acceptable?
Solution:-
To Calculate NPV of the Project-
The Project is not accepted as Net Present value of the Project is Negative. Project is accepted when NPV of the project is greater than or equal to zero. Hence, Project are not acceptable.
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