# 1. Compute the NPV statistic for Project Y if the appropriate cost of capital is 13%. Time 0 1 2...

## Question:

1. Compute the NPV statistic for Project Y if the appropriate cost of capital is 13%.

Time | 0 | 1 | 2 | 3 | 4 |
---|---|---|---|---|---|

Cash flow | -$9,100 | $3,570 | $4,400 | $1,740 | $520 |

2. Should the project be accepted or rejected?

## Calculating Net Present Value:

The net present value of a project is determined using all estimated future cash flows from the project and the company's minimum required rate od return, which is usually its cost of capital.

## Answer and Explanation: 1

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**1. - Net present value**

We must discount all the future cash flows from the project to calculate the net present value. We use the company's cost of...

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Chapter 5 / Lesson 20Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. View some examples on NPV.

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