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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