Question

One project has three cash flows: att0, the initial investment cost is $150; att1, theproject pays $121; att2, the project needs an extra investment $242; att3, the projectpays $665.5. The project has a constant spot rate of return 10%. What is the presentvalue of the project

Answer 1

Answer:

$260

Explanation:

the cash flows associated to this project are:

year 0 = -$150

year 1 = $121

year 2 = -$242

year 3 = $665.50

the discount rate is 10%

using a financial calculator, the project's net present value (NPV) = $260

since the NPV is positive, then this project should be carried out