A potential project requires an initial investment of $75,000 at the beginning of the 1st year,...
A potential project requires an initial investment of $75,000 at the beginning of the 1st year, and will give a net cash inflow of $25,000 per year (realized at the end of the 1st, 2nd and 3rd year respectively) for three years. The required rate of return is 15%. What is the Net Present Value?
NPV = Ao + Sum from t=0 to t=n of Ft /(1+R)t
Homework Answers
NPV = net present value= present value of cash inflow- the present value of cash outflow.
Discounted at the cost of capital/required rate of return. (15%)
NPV of potential Project= -$17,919.37
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A potential project requires an initial investment of $75,000 at
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