Question
After several years of operating the homeless shelter, you bring a new proposal to the governing board. By cleaning up an unused room and upgrading
After several years of operating the homeless shelter, you bring a new proposal to the governing board. By cleaning up an unused room and upgrading the church kitchen, the shelter will be able to expand its capacity. As a result, it will generate cash inflows and cash outflows over the remaining 5 years of the City contract in the amounts in the table below. If the discount rate is 5%, should the church proceed with this investment? Use NPV to show your analysis.
| Year | Cash Inflows | Cash Outflows |
| 0 | 0 | (90,000) |
| 1 | 37,000 | (18,000) |
| 2 | 39,000 | (18,000) |
| 3 | 42,000 | (18,500) |
| 4 | 44,000 | (18,500) |
| 5 | 45,000 | (19,000) |
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Public Finance Administration
Authors: B. J. Reed, John W. Swain
2nd Edition
0803974051, 978-0803974050
