Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative...

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Question

Compute the NPV for Project M if the appropriate cost of capital is 8 percent. (Negative amount should be indicated by a minu

business finance

Answer 1

Answer #1

Present value = Future value / (1 + R)^T

Present Value of cash Flows =

[($530 / (1.08)¹] + [($660 / (1.08)²] + [($700 / (1.08)³] + [($780 / (1.08)⁴] + [($280 / (1.08)⁵]

Present Value of cash Flows = $2,376.154

Initial cash Flow = ($1,900)

Net Present Value = $2,376.154 - $1,900

Net Present Value = $476.154

Net Present Value = $476.15.

The Project should be Accepted because the Net Present Value is positive.

Answer 2

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