Calculate the Net Present Value of the following project if the required cost of capital is 17.5% compounded semiannually. There will be an immediate cash outflow of $243,000 and, at the end of each year for 10 years, there will be cash inflows of $52,000 per year.

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash inflows at the semiannual rate (8.75% per period) over 20 periods (10 years), subtracting the initial outflow. The result is a negative NPV of ($11,497).

Calculate the Net Present Value of the Following Project If