You are evaluating a project with the following cash flows i

You are evaluating a project with the following cash flows: initial investment is $-6, and the  expected cash flows for years 1 - 3 are $11, $17 and $9 (all cash flows are in millions of dollars). What is this projects NPV? The company\'s WACC is 12%.

Express your answer in millions of dollars, rounded to 2 decimals and without the dollar sign. So, if your answer is 23.5678, just enter 23.57.

Solution

Calculation of NPV of the projects.

NPV= Present value of all cash flows - Initial investment

=[11*PVF@12%,Year1 + 17*PVF@12%,Year2 + 9*PVF@12%,Year3]-6

=[11*.893 + 17*.797 +9*.712] - 6

=9.823 +13.549+6.408 -6

=23.78