A company is considering an investment that will cost $868,000 and have a useful life of 6 years. The cash flows from th...
A company is considering an investment that will cost $868,000 and have a useful life of 6 years. The cash flows from the project are expected to be $548,000 per year in the first two years then $136,000 per year for the last 4 years.
If the appropriate discount rate is 18.8 percent per annum, what is the NPV of this investment (to the nearest dollar)?
Homework Answers
We see that the net present value of the project is given as
equal
to=-868000+548000/1.188+548000/1.188^2+136000/1.188^3+136000/1.188^4+136000/1.188^5+136000/1.188^6=236800.670
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