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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 Preview

    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 ...

    Solution Summary

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

    $2.19

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