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What is the net present value (NPV) of a project whose cost is $ 45,000 and...

What is the net present value (NPV) of a project whose cost is $ 45,000 and that is expected to generate a cash flow after taxes of $ 14,000 in the first 2 years, $ 10,000 in the next 2 years, and $ 8,000 in the 5th year with a required rate of return of 8%?

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Answer #1

NPV is   $ 698.99

Year Cash flow Discount factor Present Value
a b c=1.08^-a d=b*c
0 $ -45,000.00      1.0000 $ -45,000.00
1 $   14,000.00      0.9259 $   12,962.96
2 $   14,000.00      0.8573 $   12,002.74
3 $   10,000.00      0.7938 $     7,938.32
4 $   10,000.00      0.7350 $     7,350.30
5 $     8,000.00      0.6806 $     5,444.67
NPV $         698.99
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