Question

You are considering a project with projected annual cash inflows of $32,200, $41,800, $22,900 for the next three years, respectively. What is the value of the project today at a discount rate of 14 percent

Answer 1

The value of the project today is $75,866

Step-by-step explanation:

Net present value is the Net value all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.

Years 1 2 3

Cash Flows $32200 $41800 $22,900

Discount Factor 14% 0.8772 0.7695 0.6750

Present Values $28,245.61 $32,163.74 $15,456.85

Net present value = $75,866.20