If the company uses a project cost of capital of 14%, the expected net present value(NPV) of this project is -$7214.
A series of cash flows that happen at various dates are subject to the net present value (NPV) or net present worth (NPW). The amount of time until a cash flow is expected determines its present value. The discount rate also plays a role. It offers a tool for assessing and contrasting capital projects or financial products with cash flows distributed over time, such as loans, investments, insurance contract payouts, and many more applications. According to the time value of money, the value of cash flows changes with time. Based on a determined rate of return, this decrease in the current value of future cash flows has been made (or discount rate).
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