Appendix B

Aerospace Dynamics will invest $160,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year's 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 52,000 52,000 (45,000) 5 120,000 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.) Net present value b. Should the project be undertaken? O Yes O No