Fintech Blockchain Inc. was founded in 2017 to develop blockchain technology for the banking industry.

2. They have an opportunity to create a new cryptocurrency to compete against Bitcoin.

3. They are considering investing in a new computer server for the cost of $2.5 million

4. Technology changes frequently these days, thus realizing they have four years to compete with Bitcoin. At the end of year four LaSalle Street Traders Inc. and Tokens R US, LLC will be entering the market with their cryptocurrencies forcing Blockchain Inc. to stop offering their cryptocurrency.

5. The server can be depreciated over 10 years by the straight-line method.

6. At the end of the four years Blockchain Inc. assumes the server will be worth $1.35 million and they will sell the server.

7. Their cost of capital is 12%, which is higher than their normal borrowing cost of 7%

8. Operating revenue for this project =$1 million per year

9. Operating expenses for this project $400,000 per year

10. Tax rate = 23%

What is the NPV of this project?

Show the calculations in a table format

Answer rating: 100% (QA)

The following formula may be used to determine the projects Net Present Value NPV NPV Cash Flow 1 rt Initial Investment Where Cash Flow Expected cash ... View the full answer