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has a proposed project that requires an initial cash outlay of $75,000 for equipment and an additional cash outlay of $25,000 in Year 1 to cover operating costs. During Years 2 through 4, the project will generate cash inflows of $50,000 a year. What is the net present value of this project at a discount rate of 12.2 percent

Answer :

Answer:

$9,385.06

Explanation:

Net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator.

Cash flow in year zero = -$75,000

Cash flow for year one = -$25,000 

Cash flow eaxh year from year two to four = $50,000

I = 12.2%

NPV = $9,385.06

To find the NPV using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

I hope my answer helps you

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