Compute the NPV for Project M if the appropriate cost of cap

Compute the NPV for Project M if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

   

     

  

Compute the NPV for Project M if the appropriate cost of capital is 7 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Solution

Solution: NPV     $519.90 Project should be : Accepted Working Notes: a b c= a x b Year Cash Flow PVF @ 7% Present value 0 -2,000 1                        -2,000.00 d 1 550 0.93457944                      514.01869 e 2 680 0.87343873                      593.93834 f 3 720 0.81629788                      587.73447 g 4 800 0.76289521                      610.31617 h 5 300 0.71298618                      213.89585 i NPV                             519.90 j= NPV = d+e+f+g+h+i The project M should be accepted as NPV is positive $519.90 Notes: PVF is calculated @ 7% = 1/(1+0.07)^n     where n is the year of cash flows for which PVF is calculated. Please feel free to ask if anything about above solution in comment section of the question.