A firm with a 10 percent cost of capital is considering a project for this year’s...

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A firm with a 10 percent cost of capital is considering a project for this year’s...

A firm with a 10 percent cost of capital is considering a project for this year’s capital budget. The project’s expected after-tax cash flows are as follows:

Year:	0	1	2	3	4
Cash flow:	-$10,000	$3,200	$3,400	$4,700	$4,700

Calculate the project’s net present value (NPV).

	a.	$6,000.00
	b.	$2,460.35
	c.	$2,236.68
	d.	$4,545.45
	e.	$928.22

business finance

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Answer 1

Answer #1

Time Cash Flows Present Value I Present Value B = (1/1.10)^n C = A*B WNO -10,000.00 3,200.00 3,400.00 4,700.00 4,700.00 0.909

So, Net Present value = $2,460.35

Option 'B' is correct.

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Answer 2

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