Given the following information, calculate the NPV: Purchase price is $150,000, setup is $15,000; cash flows will be $15,000, $20,000, ($10,000), $30,000, and $50,000 respectively at the end of each year for the next five years. The required rate of return is 9%.

Question

Quizplus · Accepted Answer

The NPV is calculated as follows:NPV = -Initial Investment + Sum of Present Value of Cash FlowsNPV = -$150,000 + $15,000/(1+0.09)^1 + $20,000/(1+0.09)^2 + (-$10,000)/(1+0.09)^3 + $30,000/(1+0.09)^4 + $50,000/(1+0.09)^5NPV = -$150,000 + $13,761.47 + $17,442.64 + (-$7,348.68) + $22,058.82 + $33,050.41NPV = -$88,377.08

Given the Following Information, Calculate the NPV: Purchase Price Is