Homework Answers
- Calculating the NPV of the Blossom Industries's Project:-
| Year | Annual Cash Flows of Project ($) | PV Factor @18% | Present Value of Project ($) |
| 0 | (3,029,000.00) | 1.0000 | (3,029,000.00) |
| 1 | 836,610.00 | 0.8475 | 708,991.53 |
| 2 | 874,500.00 | 0.7182 | 628,052.28 |
| 3 | 1,100,000.00 | 0.6086 | 669,493.96 |
| 4 | 1,373,260.00 | 0.5158 | 708,312.23 |
| 5 | 1,589,400.00 | 0.4371 | 694,741.39 |
| 380,591.39 |
So, NPV of the Project is $380,591.39
- As the Project is producing Positive NPV, thus the Project should be ACCEPTED.
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