Question

A project has annual cash flows of $3,500 for the next 10 years and then $5,500 each year for the following 10 years. the IRR of this 20-year project is 13.73%. If the firm's WACC is 9%, what is the projects NPV? round your answer to the nearest cent.

Answer 1

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

• Press the CF button.
• CF0= -$0
• 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 weighted average cost of capital of 9%.
• Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 9% the weighted average cost of capital is $26,458.90.

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