### Project Net Present Value (NPV) Calculation#### Problem Statement:A project has expected annual cash flows of $7,000 for the next 10 years, followed by $7,000 each year for the subsequent 10 years. The Internal Rate of Return (IRR) for this 20-year project is 12.23%. If the firm's Weighted Average Cost of Capital (WACC) is 11%, what is the project's Net Present Value (NPV)?#### Instructions:1. **Do not round intermediate calculations.**2. **Round your final answer to the nearest cent.**#### Input Field:- Enter your calculated NPV: $ ____ Understanding how to calculate NPV is critical for making informed investment decisions. Keep in mind that the NPV will help you determine whether the project will add value to the company, considering the cost of capital and expected cash flows.

NPV is an important tool for decision-making. If A project with a positive net present value (NPV), it means this project brings more revenue than it costs to start. The calculation of the NPV is as follows- ABC=1/(1+0.11)AD=B*C1$7,0000.900900901$6,306.312$7,0000.811622433$5,681.363$7,0000.731191381$5,118.344$7,0000.658730974$4,611.125$7,0000.593451328$4,154.166$7,0000.534640836$3,742.497$7,0000.481658411$3,371.618$7,0000.433926496$3,037.499$7,0000.390924771$2,736.4710$7,0000.352184479$2,465.2911$7,0000.317283314$2,220.9812$7,0000.285840824$2,000.8913$7,0000.257514256$1,802.6014$7,0000.231994825$1,623.9615$7,0000.209004347$1,463.0316$7,0000.188292204$1,318.0517$7,0000.169632616$1,187.4318$7,0000.152822177$1,069.7619$7,0000.137677637$963.7420$7,0000.124033907$868.24NPV$55,743.30Thus the NPV of the project is $55743.30

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A project has annual cash flows of $7,000 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 12.23%. If the firm's WACC is 11%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

A project has annual cash flows of $7,000 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 12.23%. If the firm's WACC is 11%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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