Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Falcon Corp
Falcon Corp. is remodeling an office building it leases to Eagle Corp. Remodeling costs are $175,000. If the building is remodeled, Eagle Corp. Agrees to pay an additional $50,000 in rent for the next five years. If Falcon Corp's cost of capitalis percent, what is the net present value of the project? Please enter your answer in dollars and cents in the following form: Three dollars and seventy-five cents ($3.75) should be entered as 3.75. Please do not include the "$" sign
Falcon Corp. Is remodeling an office building it leases to Eagle Corp. Remodeling costs are $175,000. If the building is remodeled. Eagle Corp. Agrees to pay an additional $50,000 in rent for the next five years. If Falcon Corp's cost of capital is 8 percent, what is the net present value of the project? Please enter your answer in dollars and cents in the following form: Three dollars and seventy-five cents ($3.75) should be entered as 3.75. Please do not include the "$" sign.
Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=50,000/1.08+50,000/1.08^2+50,000/1.08^3+50,000/1.08^4+50,000/1.08^5
=199635.50
NPV=Present value of inflows-Present value of outflows
=199635.50-175000
=24635.5(Approx)
