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11. Project L requires an initial outlay at t = 0 of $55,000, its expected cash...

11.

Project L requires an initial outlay at t = 0 of $55,000, its expected cash inflows are $15,000 per year for 9 years, and its WACC is 11%. What is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

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Answer #1
Project
Discount rate 0.11
Year 0 1 2 3 4 5 6 7 8 9
Cash flow stream -55000 15000 15000 15000 15000 15000 15000 15000 15000 15000
Discounting factor 1 1.11 1.2321 1.367631 1.5180704 1.685058 1.870415 2.07616 2.304538 2.558037
Discounted cash flows project -55000 13513.51 12174.34 10967.87 9880.9646 8901.77 8019.613 7224.876 6508.897 5863.872
NPV = Sum of discounted cash flows
NPV Project = 28055.71
Where
Discounting factor = (1 + discount rate)^(Corresponding period in years)
Discounted Cashflow= Cash flow stream/discounting factor
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