Ask Question
26 October, 08:14

What is the net present value of a project that has an initial cash outflow of $7,670 and cash inflows of $1,280 in year 1, $6,980 in year 3, and $2,750 in year 4? the discount rate is 12.5 percent?

+4
Answers (1)
  1. 26 October, 11:22
    0
    Net present value is the present value of future cash inflows discounted at the expected rate of return minus the initial investment.

    Initial cash outflow = $7670

    Cash inflow during Year 1 = $1280

    Cash inflow during Year 2 = $0

    Cash inflow during Year 3 = $6980

    Cash inflow during Year 4 = $2750

    Discount rate = 12.5%

    NPV = (1280/1.125^1) + (0) + (6980/1.125^3) + (2750/1.125^4) - 7670

    NPV = (1280/1.125) + 0 + (6980/1.424) + (2750/1.6) - 7670

    NPV = 1137.778+0+4902.277+1716.811-7670

    NPV=86.86
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “What is the net present value of a project that has an initial cash outflow of $7,670 and cash inflows of $1,280 in year 1, $6,980 in year ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers