Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each.

Question:

Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each. Assume that the firm has an opportunity cost of 14%.

a. Initial investment is $10,000; cash inflows are $2,000 per year.

b. Initial investment is $25,000; cash inflows are $3,000 per year.

c. Initial investment is $30,000; cash inflows are $5,000 per year.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...