Question

the shelby company is considering a project that will cost $30,000 and has estimated that it will generate the following cash inflows: year 1 $15,000 year 2 12,000 year 3 10,000 assuming an interest rate of 10%, what is the net present value of this project? use time value of money factors with at least four decimal places and then round your final answer to the nearest whole dollar.

Answer 1

To calculate the net present value (NPV) of the project, we need to discount each cash inflow to the present value and subtract the initial cost.

Step-by-step explanation:

To calculate the net present value (NPV) of the project, we need to discount each cash inflow to its present value and then subtract the initial cost of the project.

Using the formula:

NPV = CF1 / (1+r)1 + CF2 / (1+r)2 + CF3 / (1+r)3 - Initial Cost

where CF1, CF2, and CF3 are the cash inflows in each year, r is the interest rate, and Initial Cost is the initial cost of the project.

By applying the formula, we can calculate the NPV of the project.