Homework SourseRossdale Flowers has a new greenhouse project with an initia
Rossdale Flowers has a new greenhouse project with an initial cost of $371,500 that is expected to generate cash flows of $46,500 for 12 years and a cash flow of $61,900 in Year 13. If the required return is 8.6 percent, what is the project\'s NPV?
?$15,800.21
$119,279.50
?$10,531.16
$5,378.66
$102,001.43
Solution
NPV = -10,531.16
| Discount rate | 8.6000% | ||
| Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
| (371,500.00) | 0 | (371,500.00) | (371,500.00) |
| 46,500.000 | 1 | 42,817.68 | (328,682.32) |
| 46,500.000 | 2 | 39,426.96 | (289,255.36) |
| 46,500.000 | 3 | 36,304.75 | (252,950.61) |
| 46,500.000 | 4 | 33,429.79 | (219,520.82) |
| 46,500.000 | 5 | 30,782.50 | (188,738.32) |
| 46,500.000 | 6 | 28,344.84 | (160,393.48) |
| 46,500.000 | 7 | 26,100.22 | (134,293.26) |
| 46,500.000 | 8 | 24,033.35 | (110,259.91) |
| 46,500.000 | 9 | 22,130.16 | (88,129.75) |
| 46,500.000 | 10 | 20,377.68 | (67,752.07) |
| 46,500.000 | 11 | 18,763.98 | (48,988.10) |
| 46,500.000 | 12 | 17,278.06 | (31,710.03) |
| 61,900.00 | 13 | 21,178.88 | (10,531.16) |
