Brown Grocery is considering a project that has an up-front cost of $X. The project will...

Brown Grocery is considering a project that has an up-front cost of $X. The project will generate a positive cash flow of $75,000 at the end of each of the next 20 years. The project has a WACC of 10% and an IRR of 12%. What is the project’s NPV?

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Expert Solution

Calculate the upfront cost as follows:

Therefore, the upfront cost is $560,208.27.

Formulas:

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Calculate the Net present value as follows:

Therefore, the net present value is $78,309.01.

Formulas:

jeff jeffy answered 6 months ago

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