Answer:
-$15,315.21
Reject the project
Explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
The NPV can be found using a financial calculator.
Cash flow in year zero = -168,000
Cash flow in year 1 = $44,800
Cash flow in Year 2 = $51,700
Cash flow in Year 3 = $48,600
Cash flow in Year 4 = $47,900
Interest rate = 10%
NPV = $-15,315.21
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
The decision rule with NPV is to accept the project if the npv is positive. Since the NPV calculated above is negative, the project should be rejected.
I hope my answer helps you
