Rossdale Flowers has a new greenhouse project with an initial cost of $339,500 that is expected...
Rossdale Flowers has a new greenhouse project with an initial cost of $339,500 that is expected to generate cash flows of $46,100 for 10 years and a cash flow of $61,500 in Year 11. If the required return is 8.4 percent, what is the project's NPV?
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$91,152.29
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$111,730.53
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−$16,685.84
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$8,639.36
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−$10,344.25
Homework Answers
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=46100/1.084+46100/1.084^2+46100/1.084^3+46100/1.084^4+46100/1.084^5+46100/1.084^6+46100/1.084^7+46100/1.084^8+46100/1.084^9+46100/1.084^10+61500/1.084^11
=$329155.75
NPV=Present value of inflows-Present value of outflows
=329155.75-339500
=-10344.25(Approx)(Negative).
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