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What is the NPV of a project that has an initial investment of $7,300, with end...

What is the NPV of a project that has an initial investment of $7,300, with end of year cash flows as follows: year 1: $1,500 year 2: $2,500 year 3: $3,000 year 4: $2,500 year 5: $1,500 The interest rate is 8%

A-$3,700 B- $1,000 C-15.24% D- $3,700

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Answer #1

HI

Here cash flows are

Y0 Y1 Y2 Y3 Y4 Y5

-7300 1500 2500 3000 2500 1500

interest rate r = 8%

NPV = -7300 + 1500/(1+8%) + 2500/(1+8%)^2 +3000/(1+8%)^3 + 2500/(1+8%)64 + 1500/(1+8%)^5

NPV = -7300 + 1388.89 + 2143.35 + 2183.497 + 1837.58 + 1020.88

NPV = $1472.18

Thanks

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