Share
Explore BrainMass

NPV

The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years. What is the net present value?

Textbook info: Operations Management, 8th Edition
Authors: Jay Heizer and Barry Render
Prentice-Hall

Solution Preview

Please see attached file
The initial cost of an investment is $65,000 and the cost of capital is 10%. The return is $16,000 per year for 8 years. What is the net present value?

Since the cash flows are the same over the years (annuity) ...

Solution Summary

The solution calculates NPV, given investment, cost of capital, cash inflows and rate of return.

$2.19