Question

A project has the following cash flows:                                    &nbs

A project has the following cash flows:

                                                                                 Project

Year                    Cash Flow

0                         -$3,233

1                            1,000

2                            1,000

3                            1,000

4                            1,000

Its cost of capital is 10 percent.  What is the project’s Net Present Value?

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Answer #1

NPV is the profitability of the project. It is the difference between present value of cash inflow - capital outlay.

We discount each years cashflow to the discount factor

Projects NPV is -63.13

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