Lowell Flooring has assigned a discount rate of 15.2 percent to a new project that has...

Lowell Flooring has assigned a discount rate of 15.2 percent to a new project that has an initial cost of $285,400 and cash flows of $87,400, $98,300, and $131,700 for Years 1 to 3, respectively. What is the net present value of this project?

Expert Solution

Year	Cashflow	PVF @ 15.2%	Present Value
0	-285,400	1.000	-285,400
1	87,400	0.868	75,868
2	98,300	0.754	74,071
3	131,700	0.654	86,145
	Net present value (NPV)		-49,316

Since NPV is negative, Lowell Flooring should not accept the project

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jeff jeffy answered 1 year ago

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