yoga center inc. is considering a project that has the following cash flow and cost of capital (r) data. what is the project's npv? note that a project's expected npv can be negative, in which case it will be rejected.



Answer :

With r: 14.00%, Year 0 1 2 3 4, Cash flows −$1,200 $400 $425 $450 $475, project's expected npv will be rejected at $62.88

An investment opportunity's whole value is intended to be captured by the financial term known as net present value (NPV). The goal of NPV is to forecast all potential future cash inflows and outflows related to an investment, discount each one to the present, and then tally them all up.

The value of a project, investment, or any set of cash flows is estimated using NPV analysis. It is a comprehensive indicator since it incorporates all revenues, costs, and capital outlays related to an investment in its free cash flow (FCF).

It also considers the time of each cash flow, which can have a significant impact on the present value of an investment, in addition to taking into account all revenues and expenses.

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