An investment project has an installed cost of $518,297. The cash flows over the 4-year life...

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An investment project has an installed cost of $518,297. The cash flows over the 4-year life...

An investment project has an installed cost of $518,297. The cash flows over the 4-year life of the investment are projected to be $287,636, $203,496, $103,802, and $92,556, respectively. What is the NPV of this project if the discount rate is 12.5 percent? Should this project be accepted?

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Answer 1

Answer #1

NPV:
Year	Cashflows	PVF at 12.5%	Present Value
0	-518297	1	-518297
1	287636	0.888889	255676.4
2	203496	0.790123	160787
3	103802	0.702332	72903.46
4	92556	0.624295	57782.26
NPV:			28852

Hence, the project shall be accepted as NPV is positive

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Answer 2

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