You are considering starting an air delivery business. Your will need to spend $127,000 today to...

 

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You are considering starting an air delivery business. Your will need to spend $127,000 today to purchase the airplane and other necessary equipment. You expect to generate cash flows (after expenses) of $15,000 per year for the first five years and then $10,000 per year for the next 5 years. At the end of 10 years, you think you can sell the business for about $96,000. If your required return is 8%, what is the NPV of this project? You are considering starting an air delivery business. Your will need to spend $127,000 today to purchase the airplane and other necessary equipment. You expect to generate cash flows (after expenses) of $15,000 per year for the first five years and then $10,000 per year for the next 5 years. At the end of 10 years, you think you can sell the business for about $96,000. If your required return is 8%, what is the NPV of this project?

Answer rating: 100% (QA)

To calculate the NPV Net Present Value of the project we need to discount the cash flows to their pr... View the full answer