Question

You will be evaluating three projects for Hasbro Toys. Hasbro's cost of capital or discount rate is 9%.

The first project (A) will cost $100,000 initially. The project will then return cash flows of $35,000 for 4 years.
The second project (B) will cost $75,000 initially. The project will then return cash flows of $65,000 in year 1, $10,000 in year 2, and $5,000 in year 3.
The third project (C) will cost $70,000 initially. The project will then return cash flows of $12,000 for 2 years and then $42,000 for 2 years after that.

What is Project A's NPV?

Answer 1

$13,390.20

Step-by-step explanation:

The net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be found using a financial calculator:

Cash flow in year 0 = $-100,000

Cash flow each year from year 1 to 4 = $35,000

I = 9%

NPV = $13,390.20

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you