The Net Present Value (NPV) of the project at a discount rate of 10% is -$519.08. The project is not financially desirable at this discount rate.
The highest discount rate at which the project would still be acceptable is approximately 33.70%.
The Net Present Value (NPV) is calculated by finding the present value of all the cash flows associated with the project and subtracting the initial investment.
To calculate the NPV of this project at a discount rate of 10%, you need to find the present value of each cash flow and sum them up:
Then, subtract the initial investment:
NPV = $727.28 + $662.07 + $601.79 + $546.17 + $494.70 + $447.91 - $3,000 = -$519.08
The NPV is negative, indicating that the project is not financially desirable at a discount rate of 10%.
To determine the highest discount rate at which the project would still be acceptable, you need to find the discount rate that makes the NPV equal to zero:
NPV = $800/(1+r) + $800/(1+r)^2 + $800/(1+r)^3 + $800/(1+r)^4 + $800/(1+r)^5 + $800/(1+r)^6 - $3,000 = 0
Using a financial calculator or software, you can find that the discount rate that makes the NPV zero is approximately 33.70%.