Question

Robbins 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 if a project's expected NPV is negative, it should be rejected.r: 10.25%Year 0 1 2 3 4 5Cash flows −$1,000 $300 $300 $300 $300 $300a. $105.89b. $111.47c. $117.33d. $123.51e. $130.01

Answer 1

Answer:

NPV= 130.01

Explanation:

Giving the following information:

Robbins Inc. is considering a project that has the following cash flow: −$1,000 $300 $300 $300 $300 $300

Cost of capital= 10.25%

To calculate the net present value we need to use the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Cf= cash flow

For example= Year 3: 300/1.1025^3= 223.86

NPV= 130.01