An investment under consideration has a payback of seven years and a cost of $884,000. Assume...
An investment under consideration has a payback of seven years and a cost of $884,000. Assume the cash flows are conventional. If the required return is 11 percent, what is the worst-case NPV? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Homework Answers
Given the seven year payback, the worst case is that the payback occurs at the end of the seventh year.
Thus, the worst-case NPV:
NPV = –$884,000 + $884,000/(1+0.11)7
NPV = –$458,213.96
Thanks
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