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Aerospace Dynamics will invest $196,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the
Aerospace Dynamics will invest $196,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth years cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year | Cash Flow | |||
1 | $ | 45,000 | ||
2 | 60,000 | |||
3 | 54,000 | |||
4 | (51,000 | ) | ||
5 | 160,000 | |||
a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
b. Should the project be undertaken?
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No
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Yes
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