Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of...

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Finance

Home Depot has been presented with an investment opportunitythat will yield end-of-year cash flows of $45,000 per year in years1 through 4, $38,000 per years 5 through 9, and $42,000 in year 10.This investment will cost the firm $185,000 today, and the firm'scost of capital is 6%. What is the NPV for this investment? Pleaseinclude formula and numbers used.

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4.5 Ratings (966 Votes)

Ans $ 121172.63

Year	Project Cash Flows (i)	DF@ 6%	DF@ 6% (ii)	PV of Project ( (i) * (ii) )
0	-185000	1	1	(1,85,000.00)
1	45000	1/((1+6%)^1)	0.943	42,452.83
2	45000	1/((1+6%)^2)	0.890	40,049.84
3	45000	1/((1+6%)^3)	0.840	37,782.87
4	45000	1/((1+6%)^4)	0.792	35,644.21
5	38000	1/((1+6%)^5)	0.747	28,395.81
6	38000	1/((1+6%)^6)	0.705	26,788.50
7	38000	1/((1+6%)^7)	0.665	25,272.17
8	38000	1/((1+6%)^8)	0.627	23,841.67
9	38000	1/((1+6%)^9)	0.592	22,492.14
10	42000	1/((1+6%)^10)	0.558	23,452.58
		PV		1,21,172.63

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Home Depot has been presented with an investment opportunitythat will yield end-of-year cash flows of $45,000 per year in years1 through 4, $38,000 per years 5 through 9, and $42,000 in year 10.This investment will cost the firm $185,000 today, and the firm'scost of capital is 6%. What is the NPV for this investment? Pleaseinclude formula and numbers used.

Home Depot has been presented with an investment opportunity that will yield end-of-year cash flows of...

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