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Compute the NPV for Project M if the appropriate cost of capital is 9 percent. (Negative...

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Finance

Compute the NPV for Project M if the appropriate cost of capitalis 9 percent. (Negative amount should be indicated by aminus sign. Do not round intermediate calculations and round yourfinal answer to 2 decimal places.)

Project M
Time:012345
Cash flow:–$1,200$390$520$560$640$140

NPV?

Should it be accepted or rejected

Answer & Explanation Solved by verified expert
3.6 Ratings (641 Votes)

Year Cash flow Discount factor Present value
a b c=1.09^-a d=b*c
0 $       -1,200      1.0000 $ -1,200.00
1 $            390      0.9174 $      357.80
2 $            520      0.8417 $      437.67
3 $            560      0.7722 $      432.42
4 $            640      0.7084 $      453.39
5 $            140      0.6499 $         90.99
NPV $      572.28
The project should be accepted because it has positive NPV.
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