What is the NPV of the following project. An investment today of $ 6,000. A cash flow in year 1 of $ 3,000, a cash flow in year 2 of $ 3,000, a cash flow in year 3 of $ 5,000, and a cash flow in year 4 of $ 7,000. The appropriate Cost of Capital (quoted interest rate) is 13%.
Enter your answer to the nearest $.01.
Do not use the $ sign or commas in your answer. If the NPV is negative, use the - sign.
Net present value = Present value of cash inflows - Initial Investment
Initial Investment = $6,000
Present value = Future value / (1 + R)T
R = rate of interest
T = Time in years
Present value of cash inflows= [$3,000 / (1.13)1] + [$3,000 / (1.13)2] + [$5,000 / (1.13)3] + [$7,000 / (1.13)4]
Present value of cash inflows = $2,654.87 + $2,349.44 + $3,465.25 + $4,923.23
Present value of cash inflows = $12,762.79
Net Present value = $12,762.79 - $6,000
Net Present value = $6,762.79
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