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Q2) Project Z has an initial investment of $81,237.00 . The project is expected to have...

Q2) Project Z has an initial investment of $81,237.00 . The project is expected to have cash inflows of $23,677.00 at the end of each year for the next 18.0 years. The corporation has a WACC of 8.51%.

Calculate the NPV for project Z.

Could someone how me a longer format on how to complete this question (step by step). Please and thank you very much for your time

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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=23,677/1.0851+23,677/1.0851^2+23,677/1.0851^3+23,677/1.0851^4+23,677/1.0851^5+23,677/1.0851^6+23,677/1.0851^7+23,677/1.0851^8+23,677/1.0851^9+23,677/1.0851^10+23,677/1.0851^11+23,677/1.0851^12+23,677/1.0851^13+23,677/1.0851^14+23,677/1.0851^15+23,677/1.0851^16+23,677/1.0851^17+23,677/1.0851^18

=214260.77

NPV=Present value of inflows-Present value of outflows

=214260.77-81,237

=$133023.77(Approx).

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