Schulman incorporated is considering investing in a project with the following expected cash flows: -920, 710, 1,560, 400

Accounting Aug 11, 2020

Schulman incorporated is considering investing in a project with the following expected cash flows: -920, 710, 1,560, 400. If Schulman's expected cost of capital is 0.30, what is the expected NPV of the project?

Expert Solution

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

=710 /(1+ 0.30) +1560/ (1+ 0.30)^2+ 400/ (1+ 0.30)^3

=$ 1651.3

NPV= Present value of inflows-Present value of outflows

=( 1651.3- 920)

= $731.3

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