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Project Z has an initial investment of $87,000. The project is expected to have cash inflows...

Project Z has an initial investment of $87,000. The project is expected to have cash inflows of $21,000 at the end of each year for the next 15 years. The corporation has a WACC of 14%. Calculate the NPV for project Z.

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Expert Solution

Ans $ 41985.53

Year Project Cash Flows (i) DF@ 14% DF@ 14% (ii) PV of Project A ( (i) * (ii) )
0 -87000 1 1                    (87,000.00)
1 21000 1/((1+14%)^1) 0.877                     18,421.05
2 21000 1/((1+14%)^2) 0.769                     16,158.82
3 21000 1/((1+14%)^3) 0.675                     14,174.40
4 21000 1/((1+14%)^4) 0.592                     12,433.69
5 21000 1/((1+14%)^5) 0.519                     10,906.74
6 21000 1/((1+14%)^6) 0.456                       9,567.32
7 21000 1/((1+14%)^7) 0.400                       8,392.38
8 21000 1/((1+14%)^8) 0.351                       7,361.74
9 21000 1/((1+14%)^9) 0.308                       6,457.67
10 21000 1/((1+14%)^10) 0.270                       5,664.62
11 21000 1/((1+14%)^11) 0.237                       4,968.96
12 21000 1/((1+14%)^12) 0.208                       4,358.74
13 21000 1/((1+14%)^13) 0.182                       3,823.46
14 21000 1/((1+14%)^14) 0.160                       3,353.91
15 21000 1/((1+14%)^15) 0.140                       2,942.03
NPV                     41,985.53

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