After year 4 the cash flows will increase by 3 per year


A project costs $1.8 million today to get started and will produce after-tax cash flows of -$200,000, $0, $200,000, $400,000 in years 1,2,3,4. After year 4 the cash flows will increase by 3% per year forever. What is the NPV of the project if the discount rate is 15%?

  1. $89,035
  2. $746,523
  3. $349,311
  4. $217,809
  5. $367,610

Solution Preview :

Prepared by a verified Expert
Finance Basics: After year 4 the cash flows will increase by 3 per year
Reference No:- TGS02770011

Now Priced at $10 (50% Discount)

Recommended (99%)

Rated (4.3/5)