Question

A five-year project has a projected net cash flow of $17,000 in year 1, $25,000 in year 2, $27,000 in year 3, $20,000 in year 4, and $15,000 in year 5. It will cost $60,000 to implement the project. If the required rate of return is 23 percent, conduct a discounted cash flow calculation to determine the NPV.

1) the NPV for the project is ____

Answer 1

The NPV of the project is $ 1,078.97

Year	Cash flow	Discount factor	Discounted cash flow
a	b	c=1.23^-a	d=b*c
0	$   -60,000.00	1.0000	$ -60,000.00
1	$     17,000.00	0.8130	$   13,821.14
2	$     25,000.00	0.6610	$   16,524.56
3	$     27,000.00	0.5374	$   14,509.37
4	$     20,000.00	0.4369	$     8,737.95
5	$     15,000.00	0.3552	$     5,328.02
	NPV		$   -1,078.97