Question

​(NPV calculation​) Calculate the NPV given the following cash​ flows, __​, if the appropriate required rate of return is 8 percent. Should the project be​ accepted? What is the​ project's NPV​? ​$  ​(Round to the nearest​ cent.)

YEAR	CASH FLOWS
0	−​$90,000
1	30,000
2	30,000
3	25,000
4	25,000
5	10,000
6	10,000
​(Click on the icon located on the​ top-right corner of the data table above in order to copy its contents into a spreadsheet.​)

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Answer 1

The NPV of a project is the PV of the outflows minus the PV of the inflows.

NPV = -$90,000 + $30,000/1.08 + $30,000/1.08² + $25,000/1.08³ + $25,000/1.08⁴ + $10,000/1.08⁵ + $10,000/1.08⁶

NPV = $14,827.02

Yes, The project should be accepted.