Calculate the NPV given the following cash flows if the appropriate required rate of return is 9%.
YEAR CASH FLOWS
0 -$80,000
1 20,000
2 20,000
3 10,000
4 10,000
5 30,000
6 30,000
What is the project's NPV? $_____
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=20,000/1.09+20,000/1.09^2+10,000/1.09^3+10,000/1.09^4+30,000/1.09^5+30,000/1.09^6
=$87374.27
NPV=Present value of inflows-Present value of outflows
=$87374.27-$80,000
=$7374.27(Approx).
Calculate the NPV given the following cash flows if the appropriate required rate of return is...