Your company wants to invest 11,500$ . Project cash flows are 4000, 3000, , 2000

Question

Your company wants to invest 11,500$ . Project cash flows are 4000, 3000, , 2000, 3000, 5000 over 5 years .. Portray with a cash flow diagram. Knowing your company borrowed the money at 9.5%. Calculate the net present worth of money and if it will be profitable Your company wants to invest 11,500$ . Project cash flows are 4000, 3000, , 2000, 3000, 5000 over 5 years .. Portray with a cash flow diagram. Knowing your company borrowed the money at 9.5%. Calculate the net present worth of money and if it will be profitable

Explanation / Answer

The present worth has been calculated as Cashflow / ((1 + interest) ^ number of year)

Net present worth is the sum of all the present worth of the cashflows

Year Cashflow Interest Present Worth NPW 0 -11500 9.50% -$11,500.00 $1,441.17 1 4000 9.50% $3,652.97 2 3000 9.50% $2,502.03 3 2000 9.50% $1,523.31 4 3000 9.50% $2,086.72 5 5000 9.50% $3,176.14

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