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    NPV (Net Present Value) of a Project

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    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?

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    Answer:
    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?

    Since the cash flows are the same over the years (annuity) we can use PVIFA factor to calculate NPV
    PVIFA= Present Value Interest Factor for an Annuity
    It can be read from tables or calculated using the following equations
    PVIFA( n, ...

    Solution Summary

    The solution calculates the NPV (Net Present Value) of a Project.

    $2.19