contestada

What is the net present value of a project with the following cash flows if the required rate of return is 9 percent?
Year 0 : -$42,398
Year 1: $18,201
Year 2: $21,219
Year 3: $17,800
a. $1,574.41
b. $1,208.19
c. $5,904.65
d. $6,029.09

Respuesta :

facundobuzzetti

Answer:

NPV= 5,904.64

Explanation:

Giving the following information:

Discount rate= 9 percent

Year 0 : -$42,398

Year 1: $18,201

Year 2: $21,219

Year 3: $17,800

To calculate the NPV, we need to use the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Year 1: 18,201/1.09= 16,698.16

Year 2: 21,219/1.09^2= 17,859.61

Year 3: 17,800/1.09^3= 13,744.87

NPV= -42,398 + 48,302.64

NPV= 5,904.64