This project requires an initial investment of $186,120. The project will have a

Question

This project requires an initial investment of $186,120. The project will have a life of 4 years. Annual revenues associated with the project will be $75,000 and expenses associated with the project will be $15,000 for an annual net cash flow of $ .

Note: Enter cash flows as positive numbers.

Project B
This project requires an initial investment of $210,600. The project will have a life of 4 years. Annual revenues associated with the project will be $80,000, and expenses associated with the project will be $15,000, for an annual net cash flow of $ .

The cost of capital for the company is 8%.

If a project has a 5-year life, requires an initial investment of $150,000, and is expected to yield annual cash flows of $50,000, what is the net present value of the project if the required rate of return is set at 8%? If required, round your answer to the nearest cent.

Present Value Tables
The Present Value of an Ordinary Annuity is the value of a stream of expected or promised future payments that have been discounted to a single equivalent value today. It is extremely useful for comparing two separate cash flows that differ in some way.
Present Value of an Annuity of $1 at Compound Interest.

What NPV does the previous calculation yield?
$

Explanation / Answer

Given the details of the Project, the Net Present Value thereof works out to $ 45,958.80 Project A Cash Flows Year 0 -$186,120 Net Present Value of the Project A is $ 11,673.71 Year 1 60000 Year 2 60000 Year 3 60000 Year 4 60000 Project B Cash Flows Year 0 -$210,600 Year 1 65000 Net Present Value of the Project A is $ 4,340.97 Year 2 65000 Year 3 65000 Year 4 65000

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