( CF 0 CF 0 ) $77,500 ( t ) ( CF Subscript t CF t ) 1 10,000 2 11,000 3 $12,000
ID: 2803592 • Letter: #
Question
(CF 0CF0)
$77,500
(t)
(CF Subscript tCFt)
1
10,000
2
11,000
3
$12,000
4
$13,000
5
$14,000
6
$15,000
7
$16,000
8
17,000
9
$18,000
10
$19,000
Using a cost of capital of
13%,
calculate the net present value for the project shown in the following table and indicate whether it is acceptable,
LOADING...
.
The net present value (NPV) of the project is
$nothing .
(Round to the nearest cent.)
Is the project acceptable?(Select the best answer below.)
NoNo
YesYes
Initial investment(CF 0CF0)
$77,500
Year(t)
Cash inflows(CF Subscript tCFt)
1
10,000
2
11,000
3
$12,000
4
$13,000
5
$14,000
6
$15,000
7
$16,000
8
17,000
9
$18,000
10
$19,000
Explanation / Answer
CACULATION OF NET PRESENT VALUE OF THE PROJECT Period Particulars Inflow (Outflow) PVF @13% Present Value 0 Outflow $ -77,500.00 1.0000 $ -77,500.00 1 Inflow $ 10,000.00 0.8850 $ 8,849.56 2 Inflow $ 11,000.00 0.7831 $ 8,614.61 3 Inflow $ 12,000.00 0.6931 $ 8,316.60 4 Inflow $ 13,000.00 0.6133 $ 7,973.14 5 Inflow $ 14,000.00 0.5428 $ 7,598.64 6 Inflow $ 15,000.00 0.4803 $ 7,204.78 7 Inflow $ 16,000.00 0.4251 $ 6,800.97 8 Inflow $ 17,000.00 0.3762 $ 6,394.72 9 Inflow $ 18,000.00 0.3329 $ 5,991.93 10 Inflow $ 19,000.00 0.2946 $ 5,597.18 $ -4,157.87 Net Present Value of the Project = $ -4,157.87 The project will not be acceptable becaue the Net present Value is negative that is - $ 4157.87 Project Acceptable = No
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