Question

1. A project has an initial cost of $63,275, expected net cash inflows of $15,000 per year for 9 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

2. A project has an initial cost of $63,275, expected net cash inflows of $15,000 per year for 9 years, and a cost of capital of 8%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

3. A project has an initial cost of $38,475, expected net cash inflows of $8,000 per year for 6 years, and a cost of capital of 14%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.

Answer 1

Solution

Question 1 )

NPV = 30,428.32

Question 2 is same as the question 1

Question 3 )

PI = Present value of future cash flow / Initial Investment = 31109.34/38475 = 0.81