Question

Skyline Corp. will invest $290,000 in a project that will not begin to produce returns until the end of the 4th year. From the end of the 4th year until the end of the 12th year (9 periods), the annual cash flow will be $64,000. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value if the cost of capital is 9 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

Answer 1

Answer:

$6,283.56

Step-by-step explanation:

The net present value is the present value of after tax cash flows from an investment to the amount invested in a project.

Net present value can be calculated using a financial calculator

Cash flow in year zero = -$290,000

Cash flow each year from year one to three = 0

Cash flow each year from year four to twelve = $64,000.

I = 9%

NPV = $6,283.56

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