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Dickson Co. 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.r: 12.00%Year 0 1 2 3 4 5Cash flows −$1,100 $400 $390 $380 $370 $360a. $250.15b. $277.94c. $305.73d. $336.31e. $369.94

Respuesta :

Answer:

$277.94

Explanation:

NPV = Present value of inflows - Present value of outflows.

Provided rate of return = 12%

Discounting factors

Year    Discount factor      Cash Flow        Present Value

0                1                        - $1,100               ($1,100)

1             0.893                        $400                  $357.20

2             0.797                        $390                  $310.74

3             0.712                        $380                  $270.56

4             0.636                        $370                  $235.32

5             0.567                        $360                  $204.12

Net Present Value = $277.94

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