A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flows
0 -3883
1 1642
2 2177
3 1967
What is the NPV for the project if the required return is 25 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=1642/1.25+2177/1.25^2+1967/1.25^3
=$3713.984
NPV=Present value of inflows-Present value of outflows
=$3713.984-$3883
=($169.02)(Approx)(Negative).
A firm evaluates all of its projects by applying the NPV decision rule. A project under...
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