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Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to...

Tall Trees, Inc. is using the net present value (NPV) when evaluating projects. You have to find the NPV for the company’s project, assuming the company’s cost of capital is 12.23 percent. The initial outlay for the project is $378,615. The project will produce the following after-tax cash inflows of

Year 1: 132,382

Year 2: 163,146

Year 3: 23,309

Year 4: 159,242

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Answer #1

Ans NPV = -$ 14269.34

Year Project Cash Flows (i) DF@ 12.23% DF@ 12.23% (ii) PV of Project ( (i) * (ii) )
0 -378615 1 1                (3,78,615.00)
1 132382 1/((1+12.23%)^1) 0.891                  1,17,955.98
2 163146 1/((1+12.23%)^2) 0.794                  1,29,526.46
3 23309 1/((1+12.23%)^3) 0.707                      16,489.09
4 159242 1/((1+12.23%)^4) 0.630                  1,00,374.12
NPV                   (14,269.34)
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