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You are evaluating a project with the following expected cash flows: an initial investment of $10...

You are evaluating a project with the following expected cash flows: an initial investment of $10 million, followed by cash flows of $2, $9 and $23 million in years 1, 2 and 3, respectively. If the company's discount rate is 11%, what is this projects NPV?

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Answer #1

Net present value is solved here using a financial calculator. The steps to solve on the financial calculator:

  • Press the CF button.
  • CF0= -$10. It is entered with a negative sign since it is a cash outflow.
  • Cash flow for all the years should be entered.
  • Press Enter and down arrow after inputting each cash flow.
  • After entering the last cash flow, press the NPV button and enter cost of discount rate of 11%.
  • Press the down arrow and CPT buttons to get the net present value.

The net present value is $15.92.

In case of any query, kindly comment on the solution

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