Answer:
NPV = $-56,153.55
The project should not be accepted because the NPV is negative
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
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
because it is the most profitable.
Cash flow in year 0 = $275,000 + $100,000 = $-375,000
Cash flow in year 1 = $ 120,000
Cash flow in year 2 = $ 120,000
Cash flow in year 3 = $ 120,000 - $40,000 = $80,000
Cash flow in year 4 = $ 120,000 + $65,000 = $185,000
I = 20%
NPV = $-56,153.55
The project should not be accepted because the NPV is negative
To find the NPV using a financial calculator:
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
