Question

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.**

Answer #1

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**

You are offered an investment with returns of $ 2,140 in year 1,
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two decimal places.
3) A project...

3.
What is the NPV of a project that costs $15,000 today and
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NPV A project has annual cash flows of $6,000 for the next 10
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Compute the NPV for Project M if the appropriate cost of capital
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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:
–$1,200
$390
$520
$560
$640
$140
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Note that the rate of return is quoted as a decimal, e.g. 12%
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