A new grocery store cost $30 million in initial investment. It is estimated that the store...
A new grocery store cost $30 million in initial investment. It is estimated that the store will generate after-tax cash flows of $2 million each year for the next 5 years. At the end of the 5 years, it can be sold for $40 million. What is the NPV of the project if the risk-adjusted WACC is 10%?
Homework Answers
NPV = -30,000,000 + 2,000,000/(1.10) + 2,000,000/(1.10)2 + 2,000,000/(1.10)3 + 2,000,000/(1.10)4 + 42,000,000/(1.10)5
NPV = $2,418,426.46
So,
Net Present Value = $2,418,426.46
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