What is the net present value of a project with the following cash flows and a r
ID: 2733283 • Letter: W
Question
What is the net present value of a project with the following cash flows and a required return of 12 percent?
Year
Cash Flows
Year 0
AED 28,900
Year 1
AED 12,450
Year 2
AED 19,630
Year 3
AED 2,750
Year
Cash Flow
PVIF
, n)
Present Value
28,900
1 .oooo
-28,900.00
1
12 450
0.8929
1 1 ,116.61
2
19 630
0.7972
15 649.04
3
2,750
0.71 18
1 ,957.45
NPV
-176.91
Year
Cash Flows
Year 0
AED 28,900
Year 1
AED 12,450
Year 2
AED 19,630
Year 3
AED 2,750
Year
Cash Flow
PVIF
, n)
Present Value
28,900
1 .oooo
-28,900.00
1
12 450
0.8929
1 1 ,116.61
2
19 630
0.7972
15 649.04
3
2,750
0.71 18
1 ,957.45
NPV
-176.91
Explanation / Answer
NET PRESENT VALUE = Present Value of Inflows- OutFlows Year Cash Flow Dis. Rate @12% Discounted cash flow(AED) (AED) 0 -28900 1 -28900.00 1 12450 0.8929 11116.61 2 19630 0.7972 15649.04 3 2750 0.7118 1957.45 NPV -176.91 Or NPV= -28900+12450/(1+0.12)+19630/(1+0.12) 2+2750/(1+0.12) 3 -176.91
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