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You are considering a project which will provide annual cash inflows of $5,832, $5,792, and $6,106...

You are considering a project which will provide annual cash inflows of $5,832, $5,792, and $6,106 at the end of each year for the next three years, respectively. What is the net present value of the project, given an initial investment of $15,751 and a 6 percent discount rate.?

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Answer #1

Sol:

Initial investment = $15,751

Cash Flows = Year 1 - $5832, Year 2 - $5792, Year 3 - $6106

Discount rate = 6%

To determine net present value of the project:

Computation of NPV of the project
Period Cash flow PV factor @6% Present value
0 -15751.00 1 -15751.00
1 5832 0.9434 5501.89
2 5792 0.8900 5154.86
3 6106 0.8396 5126.72
Net Present Value 32.46

Therefore net present value of the project will be $32.46

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