Aerospace Dynamics will invest $200,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth yearâs cash flow is negative.) Use Appendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.
Year Cash Flow 1 $ 65,000 2 77,000 3 71,000 4 (68,000 ) 5 150,000
a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
Aerospace Dynamics will invest $200,000 in a project that will produce the following cash flows. The cost of capital is 11 percent. (Note that the fourth yearâs cash flow is negative.) Use Appendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods.
| Year | Cash Flow | |||
| 1 | $ | 65,000 | ||
| 2 | 77,000 | |||
| 3 | 71,000 | |||
| 4 | (68,000 | ) | ||
| 5 | 150,000 | |||
a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
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Related questions
Waste Industries is evaluating a $52,800 project with the following cash flows.
| Years | Cash Flows | |||
| 1 | $ | 9,040 | ||
| 2 | 15,200 | |||
| 3 | 19,500 | |||
| 4 | 16,800 | |||
| 5 | 25,800 | |||
| | ||||
The coefficient of variation for the project is .895.
| Coefficient of Variation | Discount Rate | ||||||
| 0 | â | .25 | 5 | % | |||
| .26 | â | .50 | 10 | % | |||
| .51 | â | .75 | 12 | % | |||
| .76 | â | 1.00 | 19 | % | |||
| 1.01 | â | 1.25 | 20 | % | |||
| | |||||||
Use 
a. Select the appropriate discount rate.
| 5% | |
| 10% | |
| 12% | |
| 19% | |
| 20% |
b. Compute the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate
Net Present Value:
calculations and round your answer to 2 decimal places.)
c. Based on the net present value should the project be undertaken?
| Yes | |
| No |
