5) The Blueberry Company is considering a project which will cost $424 initially. The project will...

Free

50.1K

Verified Solution

Question

Finance

5) The Blueberry Company is considering a project which willcost $424 initially. The project will not produce any cash flowsfor the first 3 years. Starting in year 4, the project will producecash inflows of $454 a year for 5 years. This project is risky, sothe firm has assigned it a discount rate of 15.4 percent. What isthe net present value?

Answer & Explanation Solved by verified expert

3.9 Ratings (525 Votes)

	Computation of net present value
	i	ii	iii	iv=ii*iii
	year	Cash flow	PVIF @ 15.4%	present value
	0	-424	1.0000	(424.00)
	1	0	0.8666	-
	2	0	0.7509	-
	3	0	0.6507	-
	4	454	0.5639	256.00
	5	454	0.4886	221.83
	6	454	0.4234	192.23
	7	454	0.3669	166.58
	8	454	0.3179	144.35
				556.98

Therefore NPV =		556.98

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

5) The Blueberry Company is considering a project which willcost $424 initially. The project will not produce any cash flowsfor the first 3 years. Starting in year 4, the project will producecash inflows of $454 a year for 5 years. This project is risky, sothe firm has assigned it a discount rate of 15.4 percent. What isthe net present value?

5) The Blueberry Company is considering a project which will cost $424 initially. The project will...

Free

50.1K

Verified Solution

Question

Finance

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students