Compute the NPV for Project M if the appropriate cost of capital
is 9 percent. (Negative...
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Finance
Compute the NPV for Project M if the appropriate cost of capitalis 9 percent. (Negative amount should be indicated by aminus sign. Do not round intermediate calculations and round yourfinal answer to 2 decimal places.)
Project M
Time:
0
1
2
3
4
5
Cash flow:
–$1,200
$390
$520
$560
$640
$140
NPV?
Should it be accepted or rejected
Answer & Explanation
Solved by verified expert
3.6 Ratings (641 Votes)
Year
Cash flow
Discount factor
Present value
a
b
c=1.09^-a
d=b*c
0
$Â Â Â Â Â Â -1,200
    1.0000
$
-1,200.00
1
$Â Â Â Â Â Â Â Â Â Â Â
390
    0.9174
$Â Â Â Â Â 357.80
2
$Â Â Â Â Â Â Â Â Â Â Â
520
    0.8417
$Â Â Â Â Â 437.67
3
$Â Â Â Â Â Â Â Â Â Â Â
560
    0.7722
$Â Â Â Â Â 432.42
4
$Â Â Â Â Â Â Â Â Â Â Â
640
    0.7084
$Â Â Â Â Â 453.39
5
$Â Â Â Â Â Â Â Â Â Â Â
140
    0.6499
$Â Â Â Â Â Â Â Â 90.99
NPV
$Â Â Â Â Â 572.28
The project
should be accepted because it has positive NPV.
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