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9.Rossdale Flowers has a new greenhouse project with an initial cost of $321,000 that is expected...

9.Rossdale Flowers has a new greenhouse project with an initial cost of $321,000 that is expected to generate cash flows of $44,700 for 9 years and a cash flow of $60,100 in Year 10. If the required return is 7.7 percent, what is the project's NPV?

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Answer #1

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

  • Press the CF button.
  • CF0= -$321,000. It is entered with a negative sign since it is a cash outflow.
  • Cash flow for all the years should be entered.
  • Press Enter and down arrow after inputting each cash flow.
  • After entering the last cash flow, press the NPV button and enter the required return of 7.7%.
  • Press the down arrow and CPT buttons to get the net present value.

Net present value of cash flows at 7.7% required return is -$9,623.62.

In case of any query, kindly comment on the solution.

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