Rossdale Flowers has a new greenhouse project with an initial cost of $286,300 that is expected...

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

Expert Solution

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)

jeff jeffy answered 10 months ago

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