Frost company forecasts the launch of its new product with, Ask an Expert

Finance

Frost Company forecasts the launch of its new product with the following projected cash flows for each year. Initial investment in the project (including working capital) is $50,000. No salvage value at the end of the project.

Year Cash Flow Amount

1 $22,500

2 $21,000

3 $12,000

4 $8,500

1. Using an opportunity cost of capital of 12%, what is the Net Present Value? [Excel Formula = NPV]

[Hint: NPV of Cash Flows – Initial Investment = Net Present Value]

2. What would be the project IRR using the above data? [EXCEL Formula = IRR]

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92765127

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