Question

Abercombie Inc. will invest in a project. The project will give the company $10,000 on January 1, 2014, $23,000 on May 8, 2014, $33,000 on October 21, 2014, $42,000 on May 8, 2015 and $55,000 on October 21, 2015. If the interest rate is 5%, what the present value of the project

Answer 1

Answer:

$136,539.57

Explanation:

The present value of the project can be determined by using the cfj function of a Financial calculator as follows :

$0 CF0

$10,000 CF 1

$23,000 CF2

$33,000 CF3

$42,000 CF4

$55,000 CF5

I/YR = 5 %

Then SHIFT NPV gives $136,539.57

therefore,

the present value of the project is $136,539.57