Calculate the NPV given the following cash flows, if the appropriate required rate of return is...

Question

Question

Calculate the NPV given the following cash flows, if the appropriate required rate of return is

9 percent. Should the project be accepted?

What is the project's NPV?

YEAR   CASH FLOWS
0   -40,000
1   20,000
2   20,000
3   15,000
4   15,000
5   30,000
6   30,000

Answer 1

Answer #1

Year	Cash Flows	Discount Factor	Discounted cash Flows
0	(40,000)	1	(40,000)
1	20,000	0.91743	18,349
2	20,000	0.84168	16,834
3	15,000	0.77218	11,583
4	15,000	0.70843	10,626
5	30,000	0.64993	19,498
6	30,000	0.59627	17,888
		Net Present Value	54,777

The project have positive NPV, so the project should be accepted

Answer 2

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