Question

A project has an initial cost of $37,725, expected net cash inflows of $9,000 per year for 8 years, and a cost of capital of 11%. What is the project's NPV? (Hint:Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent.

Answer 1

Calculating the NPV of the Project:-

Year	Cash Flows of Project ($ )	PV Factor @11%	Present Value of Project ($)
0	(37,725.00)	1.0000	(37,725.00)
1	9,000.00	0.9009	8,108.11
2	9,000.00	0.8116	7,304.60
3	9,000.00	0.7312	6,580.72
4	9,000.00	0.6587	5,928.58
5	9,000.00	0.5935	5,341.06
6	9,000.00	0.5346	4,811.77
7	9,000.00	0.4817	4,334.93
8	9,000.00	0.4339	3,905.34
			8,590.10

So, Project's NPV is $8590.10