Question

A project that provides annual cash flows of $10,000 for 12 years costs $54,206 today a. If the required return is 9 percent, what is the NPV for this project? $ 17,401.066 $18,271.12 $ 16,531.01 $ 18,901.06 $ 15,901.06

Answer 1

Net present value is calculated using a financial calculator by inputting the below:

• Press the CF button.
• CF0= -$54,206. It is entered with a negative sign since it is a cash outflow.
• Cash flow for each year should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the NPV button and enter the required return of 9%.
• Press enter after that. Press the down arrow and CPT buttons to get the net present value.

The net present value of cash flows of the project is $17,401.25

Initial rate of return can be calculated using a financial calculator by inputting the below:

• Press the CF button.
• CF0= -$150,000. It is entered with a negative sign since it is a cash outflow.
• Cash flow for each year should be entered.
• Press Enter and down arrow after inputting each cash flow.
• After entering the last cash flow cash flow, press the IRR button and enter the interest rate to get the IRR of the project.

The IRR is 15%.

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