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Assume the following cash flows for a convenience store project you are considering, the initial outflow...

Assume the following cash flows for a convenience store project you are considering, the initial outflow is $661,750 followed by ten operating cash flows $123,550 in years 1 to 10. You will also receive a terminal cash flow of $438,500 also at year 10. Compute the NPV of the project given an interest rate of 12%.

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Expert Solution

Ans $ 177520.32

Year Project Cash Flows (i) DF@ 12% DF@ 12% (ii) PV of Project ( (i) * (ii) )
0 -661750 1 1                       (6,61,750.00)
1 123550 1/((1+12%)^1) 0.892857                         1,10,312.50
2 123550 1/((1+12%)^2) 0.797194                             98,493.30
3 123550 1/((1+12%)^3) 0.711780                             87,940.45
4 123550 1/((1+12%)^4) 0.635518                             78,518.26
5 123550 1/((1+12%)^5) 0.567427                             70,105.59
6 123550 1/((1+12%)^6) 0.506631                             62,594.28
7 123550 1/((1+12%)^7) 0.452349                             55,887.75
8 123550 1/((1+12%)^8) 0.403883                             49,899.77
9 123550 1/((1+12%)^9) 0.360610                             44,553.37
10 562050 1/((1+12%)^10) 0.321973                         1,80,965.06
NPV                         1,77,520.32

jeff jeffy answered 1 year ago
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