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