33. Determine the net present value for a project that costs $286,000 and would yield after-tax...

33. Determine the net present value for a project that costs $286,000 and would yield after-tax cash flows of $21,000 per year for the first 13 years, $29,000 per year for the next 12 years, and $42,000 per year for the following 12 years. Your firm's cost of capital is 8.00%.

Expert Solution

Year	Cash flow	PVIF@8%	Present value
0	$ (286,000)	1.000	$ (286,000)
1	$ 21,000	0.926	$ 19,444
2	$ 21,000	0.857	$ 18,004
3	$ 21,000	0.794	$ 16,670
4	$ 21,000	0.735	$ 15,436
5	$ 21,000	0.681	$ 14,292
6	$ 21,000	0.630	$ 13,234
7	$ 21,000	0.583	$ 12,253
8	$ 21,000	0.540	$ 11,346
9	$ 21,000	0.500	$ 10,505
10	$ 21,000	0.463	$ 9,727
11	$ 21,000	0.429	$ 9,007
12	$ 21,000	0.397	$ 8,339
13	$ 21,000	0.368	$ 7,722
14	$ 29,000	0.340	$ 9,873
15	$ 29,000	0.315	$ 9,142
16	$ 29,000	0.292	$ 8,465
17	$ 29,000	0.270	$ 7,838
18	$ 29,000	0.250	$ 7,257
19	$ 29,000	0.232	$ 6,720
20	$ 29,000	0.215	$ 6,222
21	$ 29,000	0.199	$ 5,761
22	$ 29,000	0.184	$ 5,334
23	$ 29,000	0.170	$ 4,939
24	$ 29,000	0.158	$ 4,573
25	$ 29,000	0.146	$ 4,235
26	$ 42,000	0.135	$ 5,678
27	$ 42,000	0.125	$ 5,258
28	$ 42,000	0.116	$ 4,868
29	$ 42,000	0.107	$ 4,508
30	$ 42,000	0.099	$ 4,174
31	$ 42,000	0.092	$ 3,865
32	$ 42,000	0.085	$ 3,578
33	$ 42,000	0.079	$ 3,313
34	$ 42,000	0.073	$ 3,068
35	$ 42,000	0.068	$ 2,841
36	$ 42,000	0.063	$ 2,630
37	$ 42,000	0.058	$ 2,435

Net present value			$ 6,555

jeff jeffy answered 1 year ago

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