You are trying to value the following investment opportunity: The investment will cost you $23,670 today. In exchange for your investment you will receive monthly cash payments of $5,050 for 9 months. The first payment will occur at the end of the first month. The applicable effective annual interest rate for this investment opportunity is 7%. Calculate the NPV of this investment opportunity. Round to two decimals (do not include the $-sign in your answer).
NPV = present value of cash inflows - present value of cash outflows.
present value of cash inflows = $5050 for 9 months can be known using present value of annuity factor.
r =7% *1/12 =>0.58333% =>0.0058333.
present value of cash outflows =$23,670.
NPV = $44,152.24-23,670
Get Answers For Free
Most questions answered within 1 hours.