A project which costs S42000 pron Points 5 es S 15000 in the

A project which costs S42,000 pron (Points: 5) es S 15,000 in the first period, $5000 Ln he third period, s 16,000 in the fourth period and $14,000 in the fifth period IfWACC is 55% what is the NPV of this project? O 103.43 O 98.03 O negative 10,774.54 O negative 11,367.14 O negative 103.43

Solution

Correct option is > 103.43

Working:

Year

Cash flows = CF

Df = 1/(1+5.5%)^Year

Present Value = CF x Df

0

-42,000.00

1.000000

-42,000.00

1

15,000.00

0.947867

14,218.01

2

0.00

0.898452

0.00

3

5,000.00

0.851614

4,258.07

4

16,000.00

0.807217

12,915.47

5

14,000.00

0.765134

10,711.88

Total PV = NPV =

103.43

NPV is sum of Present value of all cash flows as worked above.

Year	Cash flows = CF	Df = 1/(1+5.5%)^Year	Present Value = CF x Df
0	-42,000.00	1.000000	-42,000.00
1	15,000.00	0.947867	14,218.01
2	0.00	0.898452	0.00
3	5,000.00	0.851614	4,258.07
4	16,000.00	0.807217	12,915.47
5	14,000.00	0.765134	10,711.88
		Total PV = NPV =	103.43