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NPV, Discounted Payback Period

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1) A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV? (Hint: begin by constructing a time line.)

2) What is the project's discounted payback period?

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Solution Summary

The solution calculates NPV and Discounted Payback period for a project.

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1) A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV? (Hint: begin by constructing a time line.)

Net Present Value

To calculate the NPV ( Net Present Value) we discount the cash flow at the given discount rates
Discount rate= 12% (cost of capital)

Year Cash flow PV ...

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