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Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative...

Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project M

Time: 0 1 2 3 4 5

Cash flow –$2,200 $590 $720 $760 $840 $340

NPV $

Should the project be accepted or rejected?

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Answer #1
Project A
Discount rate 8.000%
Year 0 1 2 3 4 5
Cash flow stream -2200 590 720 760 840 340
Discounting factor 1.000 1.080 1.166 1.260 1.360 1.469
Discounted cash flows project -2200.000 546.296 617.284 603.313 617.425 231.398
NPV = Sum of discounted cash flows
NPV Project A = 415.72
Where
Discounting factor = (1 + discount rate)^(Corresponding period in years)
Discounted Cashflow= Cash flow stream/discounting factor
Accept project as NPV is positive
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