In: Finance
Rossdale Flowers has a new greenhouse project with an initial cost of $286,300 that is expected to generate cash flows of $47,900 for 7 years and a cash flow of $63,300 in Year 8. If the required return is 8.7 percent, what is the project's NPV?
$94,708.08
$67,994.70
−$18,200.22
−$10,299.17
$14,276.14
Ans −$10,299.17
Year | Project Cash Flows (i) | DF@ 8.7% | DF@ 8.7% (ii) | PV of Project A ( (i) * (ii) ) |
0 | -286300 | 1 | 1 | (2,86,300.00) |
1 | 47900 | 1/((1+8.7%)^1) | 0.920 | 44,066.24 |
2 | 47900 | 1/((1+8.7%)^2) | 0.846 | 40,539.32 |
3 | 47900 | 1/((1+8.7%)^3) | 0.779 | 37,294.68 |
4 | 47900 | 1/((1+8.7%)^4) | 0.716 | 34,309.73 |
5 | 47900 | 1/((1+8.7%)^5) | 0.659 | 31,563.69 |
6 | 47900 | 1/((1+8.7%)^6) | 0.606 | 29,037.43 |
7 | 47900 | 1/((1+8.7%)^7) | 0.558 | 26,713.37 |
8 | 63300 | 1/((1+8.7%)^8) | 0.513 | 32,476.36 |
TOTAL | (10,299.17) |