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A project has an initial cost of $47925 expected net. cash inflows of $12000 per year for...

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Finance

Aproject has an initial cost of $47925 expected net. cash inflows of$12000 per year for 12 years, and a cost of capital of 11%. What isthe project's NPV?

Answer & Explanation Solved by verified expert
4.2 Ratings (840 Votes)

NPV = PV of Cash Inflows - PV of Cash outflows

Year CF PVF @11% Disc CF
0 $ -47,925.00     1.0000 $ -47,925.00
1 $ 12,000.00     0.9009 $ 10,810.81
2 $ 12,000.00     0.8116 $    9,739.47
3 $ 12,000.00     0.7312 $    8,774.30
4 $ 12,000.00     0.6587 $    7,904.77
5 $ 12,000.00     0.5935 $    7,121.42
6 $ 12,000.00     0.5346 $    6,415.69
7 $ 12,000.00     0.4817 $    5,779.90
8 $ 12,000.00     0.4339 $    5,207.12
9 $ 12,000.00     0.3909 $    4,691.10
10 $ 12,000.00     0.3522 $    4,226.21
11 $ 12,000.00     0.3173 $    3,807.40
12 $ 12,000.00     0.2858 $    3,430.09
NPV $ 29,983.27
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