no, Essentials of Corporate Finance,le PRINTER VERSION BACK NEXT Problem 9.1 Rig

Question

no, Essentials of Corporate Finance,le PRINTER VERSION BACK NEXT Problem 9.1 Riggs Corp. management is planning to spend $650,000 next three years. If the discount rate is 17.5 percent, what is the NPV on this discount factors. Round other intermediate calcu on a new marketing campaign. They believe that this action will result in additional cash flows of $275,000 over the lations and final answer to 2 decimal places, e.g. 15.25.) project? (Enter negative amounts using negative sign e.g9. -45.25. Do not round The NPV is Click if you would like to Show Work for this question: Open Show Work VIDEO: CONCEPTS IN ACTION

Explanation / Answer

Year

Cash flow

PV factor@17.5%

PV

0

$        (650,000)

1.0000

$ (650,000.00)

1

$          275,000

0.8511

$   234,042.55

2

$         275,000

0.7243

$   199,185.15

3

$          275,000

0.6164

$   169,519.28

NPV

$    (47,253.02)

Year

Cash flow

PV factor@17.5%

PV

0

$        (650,000)

1.0000

$ (650,000.00)

1

$          275,000

0.8511

$   234,042.55

2

$         275,000

0.7243

$   199,185.15

3

$          275,000

0.6164

$   169,519.28

NPV

$    (47,253.02)

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