00:01
All right.
00:01
Our question says you are evaluating a project with the following expected cash flow in an initial investment of $10 million, followed by cash flows of $3, $7, and $25 million in years 1, 2, and 3, respectively.
00:28
If the company's discount rate is 9%, what is this project's npv? so we're going to go ahead and use our present value formula.
00:42
We have our future value.
00:45
We have 1 plus our rate to the n.
00:50
So as we look at this first instance, we have our future value of 3 over 1 plus 0 .09.
01:02
This is to the first power again in year one.
01:07
We wind up with a value of x.
01:11
All right.
01:12
We're going to do the same thing with 7.
01:14
7 divided by 1 plus 0 .09.
01:17
This is year two.
01:19
So we're going to have two years of this.
01:23
We'll evaluate...