Question
Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board of directors wants to know the expected impact on
Your firm is evaluating a capital budgeting project. The estimated cash flows appear below. The board of directors wants to know the expected impact on shareholder wealth. Knowing that the estimated impact on shareholder wealth equates to net present value (NPV), you use your handy calculator to compute the value. What is the project's NPV? Assume that the cash flows occur at the end of each year. The discount rate (i.e., required rate of return, hurdle rate) is 18.2%. (Round to nearest penny)
Year 0 cash flow
-112,000
Year 1 cash flow
54,000
Year 2 cash flow
52,000
Year 3 cash flow
32,000
Year 4 cash flow
30,000
Year 5 cash flow
26,000
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