Project A costs $5,500 and will generate annual after-tax net cash inflows of $1,700 for five...
Project A costs $5,500 and will generate annual after-tax net cash inflows of $1,700 for five years. What is the NPV using 12% as the discount rate? Round your present value factor to three decimal places and final answer to the nearest dollar.
Homework Answers
Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=1700[1-(1.12)^-5]/0.12
=1700*3.605
=6128.5
NPV=Present value of inflows-Present value of outflows
=6128.5-5500
=$629(Approx).
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