Question

Living Colour Co. has a project available with the following cash flows:

Year	Cash Flow
0	−$35,710
1	7,850
2	9,410
3	13,280
4	15,450
5	10,100

If the required return for the project is 7.5 percent, what is the project's NPV?

Answer 1

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

• Press the CF button.
• CF0= -$35,710. 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 the required return of 7.5%
• Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 7.5% required return is $9,029.19.

In case of any query, kindly comment on the solution.