Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $23 million. Kim expects the hotel will produce positive cash flows of $3.91 million a year at the end of each of the next 20 years. The project's cost of capital is 13%.
Net present value is solved using a financial calculator. The steps to solve on the financial calculator:
Net Present value of cash flows at 13% cost of capital is $4.46 million.
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