Net present value: Crescent Industries is planning to replace some existing machinery in its plant. The cost of the new equipment and the resulting cash flows are shown in the accompanying table.
If the company uses an 18 percent discount rate for project like this, the NPV is $____, and the company should reject or accept the project?
Net present value is solved using a financial calculator. The steps to solve on the financial calculator:
Net Present value of cash flows at 18% discount rate is -$92,494.9974-$92,495.
The company should reject the project since it generates a negative net present value.
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