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15 March, 10:03

A project produces a cash flow of $492 in year 1, $197 in year 2, and $857 in year 3. If the cost of capital is 14.5%, what is the project's PV?

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  1. 15 March, 12:38
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    In year 1 : 492/100*14.5=71.34; 492-71.4=420.66; year 2 : 197/100*14.5=28.565; 197 - 28.565=128.435; Year 3 : 857/100*14.5=124.256; 857 - 124.256=732.735; Pv = 420.66 + 128.435 + 732.735 = 1281.83
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