Question

Monroe, Inc., is evaluating a project. The company uses a 13.8 percent discount rate for this project. Cost and cash flows are shown in the table. What is the NPV of the project? Year Project 0 ($11,368,000) 1 $ 2,112,589 2 $ 3,787,552 3 $ 3,175,650 4 $ 4,115,899 5 $ 4,556,424 Round to two decimal places

Answer 1

You need to use a Financial calculator to solve this problem. You can download it.

Press CF Button, CFo = -11,368,000 (This is the Initial Outflow)

Press Down arrow key, CO1 = 2,112,589 (Inflow from the project after end of year 1)

Like this fill CO2=3,787,552, CO3= 3,175,650 and CO4=4,115,899 and CO5= 4,556,424

Press NPV Button, I=13.8 (The discount rate is 13.8%)

Press Down arrow key, press CPT, NPV = 409,301.98

The NPV of the project is $409,301.98

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