na NPV Calcuiate the net present value (NPV) for a 25-year project with an initial investment...

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Question

business finance

Answer 1

Answer #1

Initial investment = $25,000
Annual cash flow = $7,000
Life of project = 25 years
Cost of capital = 12%

NPV = -$25,000 + $7,000 * PVA of $1 (12%, 25)
NPV = -$25,000 + $7,000 * (1 - (1/1.12)^25) / 0.12
NPV = -$25,000 + $7,000 * 7.843139
NPV = $29,901.97

The NPV of the project is $29,901.97

You should accept this project as its NPV is positive.

Answer 2

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