Question

Let’s assume Apple store sells a laptop for $1,348 today and Adobe Suite for $25 monthly payment (at the beginning of each month). You are offered to join a company that will pay you $300 per month (at the end of each month) for small Adobe Photoshop work, that you can do fast and easy. The cost of capital is 4% with c.c. What is the NPV for this opportunity? -----------------

Answer 1

To calculate the NPV for this opportunity, we need to consider the cash flows from the Apple store laptop purchase and the monthly income from the Adobe Photoshop work. The NPV formula is NPV = -Initial Investment + (Cash Flow1 / (1 + Cost of Capital) + Cash Flow2 / (1 + Cost of Capital)2 + ... + Cash Flown / (1 + Cost of Capital)n). In this case, the initial investment is the price of the laptop ($1,348). The cash flows consist of the monthly income from the Adobe Photoshop work ($300) for the expected duration that the work is available. We would need to know the expected duration of the work to calculate the NPV.

Step-by-step explanation:

To calculate the NPV (Net Present Value) for this opportunity, we need to consider the cash flows from the Apple store laptop purchase and the monthly income from the Adobe Photoshop work. The NPV formula is:

NPV = -Initial Investment + (Cash Flow1 / (1 + Cost of Capital) + Cash Flow2 / (1 + Cost of Capital)2 + ... + Cash Flown / (1 + Cost of Capital)n)

In this case, the initial investment is the price of the laptop ($1,348). The cash flows consist of the monthly income from the Adobe Photoshop work ($300) for the expected duration that the work is available. We would need to know the expected duration of the work to calculate the NPV.