Question

I would really appreciate if you answers descriptively. I want to solutions and formulas. I don't want to any excell solutions. Thank you!

Question 3. In a project, an initial investment of $8,300 equipment is expected to generate net cash inflow of $3,400, $4,000, $5,800 and $2,050 at the end of first, second, third and fourth year respectively. At the end of the fourth year, equipment would be sold for $900. Calculate the net present value of the investment if the discount rate is 18% and explain if the project is acceptable.

Question 4. In the previous question, assume that there will be 5% inflation rate in the next four years. Reconsider if the project is acceptable or not?

Answer 1