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Calculate the NPV given the following cash​ flows YEAR   CASH FLOWS 0 -60,000 1 25,000 2...

Calculate the NPV given the following cash​ flows

YEAR   CASH FLOWS
0 -60,000
1 25,000
2 25,000
3 15,000
4 15,000
5 10,000
6   10,000

if the appropriate required rate of return is 8 percent. Should the project be​ accepted? What is the​ project's NPV​?

Solutions

Expert Solution

Ans $ 20622.08

Since NPV is positive, the project must be accepted.

Year Project Cash Flows (i) DF@ 8% DF@ 8% (ii) PV of Project ( (i) * (ii) )
0 -60000 1 1                    (60,000.00)
1 25000 1/((1+8%)^1) 0.926                     23,148.15
2 25000 1/((1+8%)^2) 0.857                     21,433.47
3 15000 1/((1+8%)^3) 0.794                     11,907.48
4 15000 1/((1+8%)^4) 0.735                     11,025.45
5 10000 1/((1+8%)^5) 0.681                       6,805.83
6 10000 1/((1+8%)^6) 0.630                       6,301.70
NPV                     20,622.08

jeff jeffy answered 1 year ago
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