What is the NPV of the following project, assuming a required return of 6%? Year Cash...

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Question

What is the NPV of the following project, assuming a required return of 6%?

Answer 1

Answer #1

Ans.	Year	Cash inflows	PV @ 6%	Present value of cash inflows
	1	$41,400	0.9434	$39,057
	2	$50,706	0.8900	$45,128
	3	$92,833	0.8396	$77,944
	Total Present value of cash inflows			$162,129


	Present value of cash inflows		$162,129
	Less: Investment		-$150,993
	Net present value		$11,136

	*Calculation of Present value factors: (PV @ 6%)

	Year		PV @ 6%
	1	1 / (1 + 0.06)^1	0.9434
	2	1 / (1 + 0.06)^2	0.8900
	3	1 / (1 + 0.06)^3	0.8396

Answer 2

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