Question
Consider the following project: Year 0 1 2 3 Cash flow -$21.00 $7.00 $11.00 $15.00 What is the NPV of this project if the cost
Consider the following project:
| Year | 0 | 1 | 2 | 3 |
|---|---|---|---|---|
| Cash flow | -$21.00 | $7.00 | $11.00 | $15.00 |
What is the NPV of this project if the cost of capital is 12.00%?
A project requires an initial investment today of $100,163.00. The project will last three years. However, the company believes that the risk involved with the project will increase over its life, so they would like a greater return for later cash flows. The table below shows the projected cash flows and the discount rates required for the project.
| Year | 0 | 1 | 2 | 3 |
|---|---|---|---|---|
| Cash flow | -$100,163.00 | $54,089.00 | $49,814.00 | $45,188.00 |
| Discount rate | 9.00% | 13.00% | 18.00% |
What is the NPV of this project?
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Financial Markets And Institutions
Authors: Jeff Madura
13th Edition
0357130790, 978-0357130797
