Question

Max is considering an investment proposal that requires an initial investment of $91,100, has predicted cash inflows of $30,000 per year for four years and no salvage value. At a discount rate of 10 percent the projects net present value is

Answer 1

Answer:

$3,995.96

Explanation:

Cash flow summary for the project as entered in financial calculator is :

- $91,100 CF0

$30,000 CF1

$30,000 CF2

$30,000 CF3

$30,000 CF4

i/yr = 10 %

therefore,

Shift NPV gives a net present value of $3,995.96

thus,

At a discount rate of 10 percent the projects net present value is $3,995.96