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How do compute the project net present value

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Reference no: EM132960722

A firm wishes to bid on a contract that is expected to yield the following after-tax net cash flows at the end of each year:

Year Net Cash Flow

1 $9,000

2 7,000

3 8,000

4 7,000

5 3,000

6 5,000

7 3,000

8 -$1,000

  • To secure the contract, the firm must spend $50,000 to retool its plant. This retooling will have no salvage value at the end of the 8 years. Comparable investment alternatives are available to the firm that earn 11 percent compounded annually.

Problem 1: Compute the project's net present value. Round your answer to the nearest dollar.

Reference no: EM132960722

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