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What is the net present value of a project with the following cash flows and a r

ID: 2733283 • Letter: W

Question

What is the net present value of a project with the following cash flows and a required return of 12 percent?

Year

Cash Flows

Year 0

AED 28,900

Year 1

AED 12,450

Year 2

AED 19,630

Year 3

AED 2,750

Year

Cash Flow

PVIF

, n)

Present Value

28,900

1 .oooo

-28,900.00

1

12 450

0.8929

1 1 ,116.61

2

19 630

0.7972

15 649.04

3

2,750

0.71 18

1 ,957.45

NPV

-176.91

Year

Cash Flows

Year 0

AED 28,900

Year 1

AED 12,450

Year 2

AED 19,630

Year 3

AED 2,750

Year

Cash Flow

PVIF

, n)

Present Value

28,900

1 .oooo

-28,900.00

1

12 450

0.8929

1 1 ,116.61

2

19 630

0.7972

15 649.04

3

2,750

0.71 18

1 ,957.45

NPV

-176.91

Explanation / Answer

NET PRESENT VALUE = Present Value of Inflows- OutFlows Year Cash Flow Dis. Rate @12% Discounted cash flow(AED) (AED) 0 -28900 1 -28900.00 1 12450 0.8929 11116.61 2 19630 0.7972 15649.04 3 2750 0.7118 1957.45 NPV -176.91 Or NPV= -28900+12450/(1+0.12)+19630/(1+0.12) 2+2750/(1+0.12) 3 -176.91

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