You have an opportunity to invest $100,000 now in return for $79,900 in one year and...

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You have an opportunity to invest $100,000 now in return for $79,900 in one year and...

You have an opportunity to invest $100,000 now in return for $79,900 in one year and $30,400 in two years. If your cost of capital is 9.2 %, what is the NPV of this investment?

The NPV will be $____. (Round to the nearest cent.)

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Answer 1

Answer #1

ANSWER = - $1,306

YEAR	CASH INFLOW (A)	PVF @ 9.2% (B)	PV OF CASH INFLOW *(A) (B)**
1	79,900	0.916	73,188
2	30,400	0.839	25,506
			98,694

PV of cash outflow = 100,000

NPV = PV of cash inflow - PV of cash outflow

NPV = $98,694 - $100,000

NPV = - $1,306

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Answer 2

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