Question

Problem 10-01 NPV A project has an initial cost of $66,950, expected net cash inflows of $14,000 per year for 9 years, and a cost of capital of 10%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Round your answer to the nearest cent. $

Answer 1

NPV = $13,676.33

Explanation:

First, find the present value of the cash inflows. You can solve this question using a Financial calculator;

14,000 per year is a recurring cashflow hence the PMT

PMT = 14,000

I/Y = 10%

N= 9

FV =0

then CPT PV = 80,626.33

NPV = -Initial investment + PV of future cash inflows

NPV = -66,950 + 80,626.33

NPV = $13,676.33

"NPV" button, then , then "CPT".

The answer to the NPV = $13,676.33