What is the net present value of a project with the following cash flows, if the required return is 12%? Year 0, $(400,000); Year 1, $171,600; Year 2, $213,919; Year 3, $242,645

Finance Dec 26, 2020

What is the net present value of a project with the following cash flows, if the required return is 12%? Year 0, $(400,000); Year 1, $171,600; Year 2, $213,919; Year 3, $242,645.

Expert Solution

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=171600/1.12+213919/1.12^2+242645/1.12^3

=496459.12

NPV=Present value of inflows-Present value of outflows

=496459.12-400,000

=$96459.12(Approx)

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