Question

Compute the NPV statistic for Project Y if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal place.)

Project Y Time: 0 1 2 3 4

Cash flow: –$9,300 $3,610 $4,440 $1,780 $560

NPV $ _________

Should the project be accepted or rejected? _____________

Answer 1

Year	Cash inflows	Discount factor @ 11%	Present Value
a	b	c=1.11^-a	b*c
1	$ 3,610	0.9009	$         3,252.25
2	$           4,440	0.8116	$         3,603.60
3	$           1,780	0.7312	$         1,301.52
4	$ 560	0.6587	$            368.89
Total			$         8,526.27
Less:Cost of Investment			$         9,300.00
Net Present Value			$ -773.73
Since, project has Negative Net Present Value, it should be rejected.