Wildebeast Inc is considering a project with an initial cost

Wildebeast Inc. is considering a project with an initial cost of $9,500. The project will produce cash inflows of $2,800 a year for 4 years with a final cash inflow of $5,700 in year 5. What is the net present value of this project if the required rate of return is 16 percent? Show All Work

Solution

Year cash flows PVf @ 16% Present value 0 -9500 1 -9500 1 2800 0.862069 2413.793 2 2800 0.743163 2080.856 3 2800 0.640658 1793.841 4 2800 0.552291 1546.415 5 5700 0.476113 2713.844 Net present value 1048.75