A project that costs $4,000 to install will provide annual cash flows of $1,300

Question

A project that costs $4,000 to install will provide annual cash flows of $1,300 for each of the next 6 years.

Calculate the NPV if the discount rate is 14%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

How high can the discount rate be before you would reject the project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

A project that costs $4,000 to install will provide annual cash flows of $1,300 for each of the next 6 years.

Explanation / Answer

1 PMT 1300 no of period 6 rate 14% FV 0 PV $5,055.27 initial cost -4000 NPV $1,055.27 2 IRR year cash flow 0 -4000 1 1300 2 1300 3 1300 4 1300 5 1300 6 1300 IRR 23.21%

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