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a project that provides annual cash flows of $11,700 for nine years costs $63,000 today. what is the npv for the project if the required return is 8 percent? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)



Answer :

The NPV of the project is $10,088.73.

What is NPV?

The net present value (NPV) of an investment opportunity is a financial metric that attempts to capture the total value of the opportunity. The concept of NPV is to project all of the future cash inflows and outflows associated with an investment, discount all of those future cash flows to the present day, and then add them all together.

The net present value is calculated as:-

The present value of Annual cash Inflow = $11,700(PVIFA₉,₀.₀₈)

                                                                     = $11,700× 6.2469

                                                                      = $73,088.73

Net Present Value =  $(73,088.73-63,000)

                                = $ 10,088.73

Therefore, the net present value for the project is $10,088.73.

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