Problem:
A project is expected to create operating cash flows of $31,000 a year for three years. The initial cost of the fixed assets is $64,000. These assets will be worthless at the end of the project. An additional $2,500 of net working capital will be required throughout the life of the project.
Required:
Question: What is the project's net present value if the required rate of return is 15 percent?
- $4,279.98
- $3,423.77
- $8,423.77
- $2,033.33
- $5,923.77
Note: Please show how to work it out.