east coast television is considering a project with initial outlay of $X ( you w

Question

east coast television is considering a project with initial outlay of $X ( you will have to determine this amount) It is expected that the project will produce a positive cash flow of 43,000 a year at the end of each year for the next 17 years. The appropriate discount rate for this project is 7%. If the project has an initial return of 10%, what is the projects net present value? A. if the project has an internal rate of return at 14% Then the projects internal outlay is ? (round to the nearest cent)

Explanation / Answer

Thus,

Net Present Value is

$ 38,165.3

Annual Cash Inflow a 43000 Cumulative Discount factor @ 7% b 9.763 Total Present Value of Cash Inflows c=a*b 419818.6 Let Assume Initial Invetsment is x Initial Return 10% Then Net Cash Inflow x*10% from Question, x*10% 419818.6-x .x 419818.6-x 1.1x 419818.6 x 381653.3 Net Present value Present Value of Cash Inflow- Present Value of Cash outflow 419818.6-381653.3 38165.3

Thus,

Net Present Value is

$ 38,165.3

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