Aerospace Dynamics will invest $197,000 in a project that will produce the follo

Question

Aerospace Dynamics will invest $197,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

What is the net present value of the project?

Aerospace Dynamics will invest $197,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Explanation / Answer

NPV=-197000+46000/1.1+55000/1.1^2+52000/1.1^3-49000/1.1^4+150000/1.1^5

So, NPV=$-10988.4

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