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The Sisyphean Company is planning on investing in a new project. This will involve the purchase...

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Finance

The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing?$450,000. The Sisyphean Company expects cash inflows from thisproject as detailed? below:

Year One

Year Two

Year Three

Year Four

?$200,000

?$225,000

?$275,000

?$200,000

The appropriate discount rate for this project is? 16%.

The NPV for this project is closest? to:

Answer & Explanation Solved by verified expert
3.7 Ratings (685 Votes)

The NPV for this project is closest? to $176,264.53
Statement showing Cash flows
Particulars Time PVf 16% Amount PV
Cash Outflows                             -                           1.00         (450,000.00)             (450,000.00)
PV of Cash outflows = PVCO             (450,000.00)
Cash inflows                         1.00                    0.8621            200,000.00               172,413.79
Cash inflows                         2.00                    0.7432            225,000.00               167,211.65
Cash inflows                         3.00                    0.6407            275,000.00               176,180.86
Cash inflows                         4.00                    0.5523            200,000.00               110,458.22
PV of Cash Inflows =PVCI               626,264.53
NPV= PVCI - PVCO               176,264.53

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Transcribed Image Text

The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing?$450,000. The Sisyphean Company expects cash inflows from thisproject as detailed? below:Year OneYear TwoYear ThreeYear Four?$200,000?$225,000?$275,000?$200,000The appropriate discount rate for this project is? 16%.The NPV for this project is closest? to:

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