A project has the following cash flows over the next four years starting right now; -5000;...

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A project has the following cash flows over the next four years starting right now; -5000;...

A project has the following cash flows over the next four years starting right now; -5000; 2000; 2000; 2,863; 4000. The project’s cost of capital is 8 percent. What is the project’s net present value

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Answer 1

Answer #1

Calculate the net present value as follows:

ДА В с D 240 Year Amount PVF 8% Amount 241 0 $5,000.00 10 $5,000.00 242 11 $2,000.00 0.92593| $1,851.85 243 2 $2,000.00 0.857

Formulas:

с ДА В 240 Year Amount 241 0 -5000 242 1 2000 243 2 2000 244 3 2863 245 4 4000 246 Net present value PVF 8% =1/(1+8%)^A241 =1

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Answer 2

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