In: Finance
What is the NPV of a project that costs $111,000 today and is expected to generate annual cash inflows of $12,000 for the next 11 years. Cost of capital (discount rate) is 11%. Round to the nearest cent.
Ans -$36521.82
Year | Project Cash Flows (i) | DF@ 11% | DF@ 11% (ii) | PV of Project ( (i) * (ii) ) |
0 | -111000 | 1 | 1 | (1,11,000.00) |
1 | 12000 | 1/((1+11%)^1) | 0.900901 | 10,810.81 |
2 | 12000 | 1/((1+11%)^2) | 0.811622 | 9,739.47 |
3 | 12000 | 1/((1+11%)^3) | 0.731191 | 8,774.30 |
4 | 12000 | 1/((1+11%)^4) | 0.658731 | 7,904.77 |
5 | 12000 | 1/((1+11%)^5) | 0.593451 | 7,121.42 |
6 | 12000 | 1/((1+11%)^6) | 0.534641 | 6,415.69 |
7 | 12000 | 1/((1+11%)^7) | 0.481658 | 5,779.90 |
8 | 12000 | 1/((1+11%)^8) | 0.433926 | 5,207.12 |
9 | 12000 | 1/((1+11%)^9) | 0.390925 | 4,691.10 |
10 | 12000 | 1/((1+11%)^11) | 0.352184 | 4,226.21 |
11 | 12000 | 1/((1+11%)^11) | 0.317283 | 3,807.40 |
NPV | (36,521.82) | |||