Question

A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project. If the required rate of return is 20 percent, conduct a discounted cash flow calculation to determine the NPV.

Answer 1

The value of Net present value is $12,895.45.

Given that

initial investment = $50,000

1st-year cash flow = $15,000

2nd-year cash flow =$ 25,000

3rd-year cash flow =$ 30,000

4th-year cash flow = $20,000

5th-year cash flow = $15,000

rate = 20%

using formula

$NPV = \frac{R}{({1+i})^t}$

$NPV = \frac{15000}{({1+0.20})^5}\\NPV = 12895.45$

What is Net Present value?

• The current value of a future stream of payments from a business, project, or investment is determined using net present value, or NPV.
• You must predict the timing and size of future cash flows in order to determine NPV, and you must choose a discount rate that is equal to the least allowable rate of return.
• Your cost of capital or the rewards offered by substitute investments with comparable risk may be reflected in the discount rate.
• Positive NPV indicates that the rate of return on a project or investment will be higher than the discount rate.
• to learn more about Net present value with the given link

brainly.com/question/14293955

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