Living Colour Co. has a project available with the following cash flows: Year Cash Flow 0...

Question

Question

Living Colour Co. has a project available with the following cash flows:

Year Cash Flow

0 −$35,070

1 7,970

2 9,570

3 13,560

4 15,610

5 10,340

If the required return for the project is 7.9 percent, what is the project's NPV?

business finance

Answer 1

Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=7970/1.079+9570/1.079^2+13560/1.079^3+15610/1.079^4+10340/1.079^5

=$44987.05

NPV=Present value of inflows-Present value of outflows

=$44987.05-$35070

=$9917.05(Approx).

Answer 2

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