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Albury Company is adding a new assembly line at a cost of $8.5 million. The company...

Albury Company is adding a new assembly line at a cost of $8.5 million. The company expects the project to generate cash flows of $2 million, $3 million, $4 million, and $5 million over the next four years. Its cost of capital is 16 percent. What is the net present value of this project? Select one: A. $1,213,909 B. $905,888 C. $777,713 D. $645,366

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Answer #1

We see that the net present value of the project is given as equal to=-8.5*10^6+2*10^6/1.16+3*10^6/1.16^2+4*10^6/1.16^3+5*10^6/1.16^4=777712.8185

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