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Project Bhas the following cash flows: CF0 = -100, C01 = -390, C02 = 660, C03...

Project Bhas the following cash flows: CF0 = -100, C01 = -390, C02 = 660, C03 = 330, C04 = -290. What is the PV of only the costs to Project B if the cost of capital is 0.07?

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Expert Solution

Ans PV of only the costs to Project B= $ 685.73

Year Project Cash Flows (i) DF@ 7% DF@ 7% (ii) PV of Project A ( (i) * (ii) )
0 -100 1 1                         (100.00)
1 -390 1/((1+7%)^1) 0.935                         (364.49)
2 0 1/((1+7%)^2) 0.873                                    -  
3 0 1/((1+7%)^3) 0.816                                    -  
4 -290 1/((1+7%)^4) 0.763                         (221.24)
PV OF COSTS                         (685.73)

jeff jeffy answered 6 months ago
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