Homework SourseLiving Colour Co has a project available with the following
Living Colour Co. has a project available with the following cash flows:
If the required return for the project is 8.9 percent, what is the project\'s NPV?
$12,099.35
$25,980.00
$13,107.63
$13,827.83
$4,956.39
| Year | Cash Flow | |
| 0 | ?$33,470 | |
| 1 | 8,270 | |
| 2 | 9,970 | |
| 3 | 14,260 | |
| 4 | 16,010 | |
| 5 | 10,940 | |
Solution
$12,099.35
Working:
| Year | Cash flow | Discount factor | Present Value | |
| a | b | c=1.089^-a | d=b*c | |
| 0 | $ -33,470 | 1.0000 | $ -33,470.00 | |
| 1 | 8,270 | 0.9183 | 7,594.12 | |
| 2 | 9,970 | 0.8432 | 8,406.97 | |
| 3 | 14,260 | 0.7743 | 11,041.70 | |
| 4 | 16,010 | 0.7110 | 11,383.60 | |
| 5 | 10,940 | 0.6529 | 7,142.96 | |
| Total | $ 12,099.35 | |||
