question archive The cash flows associated with an investment project are an immediate cost of $2200 and benefits of $600 one year, $600 in two years, and $1300 in three years
The cash flows associated with an investment project are an immediate cost of $2200 and benefits of $600 one year, $600 in two years, and $1300 in three years
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The cash flows associated with an investment project are an immediate cost of $2200 and benefits of $600 one year, $600 in two years, and $1300 in three years. The cost of capital (WACC) is 10% what is the project's NPV?
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NPV = PV of cash inflows - Initial investment
NPV = [(first cash flow / (1+rate)n) + (2nd cash flow / (1+rate)n) + (3rd cash flow / (1+rate)n)] - Initial investment
NPV = [(600 / (1+0.10)1) + (600 / (1+0.10)2) + (1300 / (1+0.10)3)] - 2200
NPV = -181.9684448, or -181.97
