Question

**Net present value:** Riggs Ltd is planning to
spend $650,000 on a new marketing campaign. It believes that this
action will result in additional cash flows of $299,173 over the
next three years. If the discount rate is 17.5 percent, the NPV is
$___

*(Round your answer to 2 decimal places. All
intermittent calculations should be rounded to 4 decimal places
before carrying to next calculation. If the number is negative
identify with a negative symbol (-).)*

Answer #1

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

- Press the CF button.
- CF0= -$650,000. 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 discount rate of 17.5%.
- Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 17.5% discount rate is
**$5,729.54.**

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

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