Compute the npv of project

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Project Alpha offers the following net cash flows following an initial (year 0), certain outlay (NINV) of $70,000.

Year                       Net Cash Flow                                   Certainty equivalent factor

1                              $30,000                                                 .91

2                              $30,000                                                 .79

3                              $30,000                                                 .65

4                              $20,000                                                 .52

5                              $20,000                                                 .40

6                              $10,000                                                 .30

a) Compute the NPV of this project at a 12 percent cost of capita

b) If the risk-free rate is 4 percent, what is the certainty equivalent NPV for Project Alpha?

Reference no: EM133075466

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