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A project needs an initial outlay of $3000 for equipment and will net a cash flow...

A project needs an initial outlay of $3000 for equipment and will net a cash flow of $300 for the next 12 years. At the end of the 12th year, there is a Salvage Value of $1000 for the equipment. What is the NPV of the project if the cost of capital is 12% p.a. effective (to the nearest dollar)?

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Answer:

Year CF Discounted CF
0 -3000 -3000
1 300 267.8571429
2 300 239.1581633
3 300 213.5340743
4 300 190.6554235
5 300 170.2280567
6 300 151.9893364
7 300 135.7047646
8 300 121.1649684
9 300 108.1830075
10 300 96.59197098
11 300 86.24283123
12 1300 333.6776208
NPV -885.0126394

NPV = -885.01

jeff jeffy answered 2 years ago
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