Daniel's Market is considering a project with an initial cost of $176,500. The project will not...

Daniel's Market is considering a project with an initial cost of $176,500. The project will not produce any cash flows for the first three years. Starting in Year 4, the project will produce cash inflows of $127,500 a year for three years. This project is risky, so the firm has assigned it a discount rate of 17 percent. What is the project's net present value?

Expert Solution

NPV = Present Value of Cashflows - Initial Investment

Year	Cash Flow	PVIF @17%	Present Value
0	$ (176,500.00)	1.0000	$ (176,500.00)
1	$ -	0.8547	$ -
2	$ -	0.7305	$ -
3	$ -	0.6244	$ -
4	$ 127,500.00	0.5337	$ 68,040.38
5	$ 127,500.00	0.4561	$ 58,154.17
6	$ 127,500.00	0.3898	$ 49,704.42
		NPV	$ (601.03)

jeff jeffy answered 3 years ago

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