question archive Question 4) A project has an initial outlay of $2,907
Question 4) A project has an initial outlay of $2,907
Subject:AccountingPrice:2.86 Bought11
Question 4) A project has an initial outlay of $2,907. It has a single payoff at the end of year 4 of $6,572. What is the net present value (NPV) of the project if the company's cost of capital is 14.55 percent?
Round the answer to two decimal places.
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The net present value (NPV) of the project = $909.96
Step-by-step explanation
Initial outlay = $2,907
NPV = Present value of cashflow - Initial outlay
Present value of cashflow = Future amount / ( 1 + r)n
r = 14.55% = 0.1455
n = 4
Future amount = $6,572
= $6,572 / ( 1 + 0.1455)4
= $6,572 / 1.14554
= $6,572 / 1.721790765
= $3,816.956237
NPV
= $3,816.956237 - $2,907
= $909.9562375
= $909.96
