In: Finance
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?
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) |