A project has an initial cost of $61,800, expected net cash inflows of $12,000 p

Question

A project has an initial cost of $61,800, expected net cash inflows of $12,000 per year for 10 years, and a cost of capital of 9%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent. A project has an initial cost of $61,800, expected net cash inflows of $12,000 per year for 10 years, and a cost of capital of 9%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

Explanation / Answer

Present value of inflows=$12000*Present value of annuity factor(9%,10)

=$12000*6.417657701

=$77011.89(Approx)

NPV=Present value of inflows-Present value of outflows

=$77011.89-$61800

=$15211.89(Approx).

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