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what is the net present value of an investment with the following cash flows if the required rate of return is 9%? year cash flow 0 -$17,000 1 $ 7,000 2 $ 3,000 3 $13,000

Sagot :

The net present value of the investment will be $33,013.5

Given,

rate of interest  (r)= 9% or 0.09

n = 4

cash flows  are given as :

year 0 = $17000

year 1 = $7000

year 2 = $ 3000

year 4= $ 13000

Taking values from the NPV table for 4 years at 9%, we get them as 0.9174, 0.8417,0.7722,0.7084

Substituting the above values we get:

NPV  =  cash flow * PVF (9%, 4 years)

NPV = 17000*0.9174 + 7000*0.8417 +3000*0.7722+13000*0.7084

NPV = 15,595.8 + 5891.9 + 2316.6 + 9209.2

NPV = 33,013.5

So, the net present value of the investment will be $33,013.5

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