Question

Living Colour Co. has a project available with the following cash flows: 0 - $32,830 1 8,390 2 10,130 3 14,540 4 16,170 5 11,180 If required return for the project is 9.3 percent, what is the project's NPV?

Answer 1

Ans.	Year	Cash inflows	PV @ 9.3%	PV of cash inflow
	1	$8,390	0.9149	$7,676
	2	$10,130	0.8371	$8,479
	3	$14,540	0.7658	$11,135
	4	$16,170	0.7007	$11,330
	5	$11,180	0.6411	$7,167
	Total present value of cash inflows			$45,788
	Net present value = Present value of cash inflows - Initial investment
	$45,788 - $32,830
	$12,958		(rounded)
	*Calculation of PV @ 9.3%
	Year		PV @ 9.3%
	1	1 / (1 + 0.093)^1	0.9149
	2	1 / (1 + 0.093)^2	0.8371
	3	1 / (1 + 0.093)^3	0.7658
	4	1 / (1 + 0.093)^4	0.7007
	5	1 / (1 + 0.093)^5	0.6411