Question

A project has an initial cost of $66,775, expected net cash inflows of $15,000 per year for 11 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.

Answer #1

**NET PRESENT VALUE = 40309**

year |
cash
inflows |
pv @ 8% |
present
value |

1 | 15000 | 0.9259 | 13888.5 |

2 | 15000 | 0.8573 | 12859.5 |

3 | 15000 | 0.7938 | 11907 |

4 | 15000 | 0.735 | 11025 |

5 | 15000 | 0.6806 | 10209 |

6 | 15000 | 0.6302 | 9453 |

7 | 15000 | 0.5835 | 8752.5 |

8 | 15000 | 0.5403 | 8104.5 |

9 | 15000 | 0.5002 | 7503 |

10 | 15000 | 0.4632 | 6948 |

11 | 15000 | 0.4289 | 6433.5 |

Total Present value of cash inflow | 107083.5 | ||

(less) cash outflow | -66775 | ||

NET PRESENT
VALUE |
40308.5 |

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