Calculate the net present value of the project

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Question - Consider the following cash flow series over the twenty-year period of a project. The salvage of the project at the end of its life is negligible.

End of year 0 1 2 3 ................... 20

Cash Flows ($): 5,000,000 1,000,000 1,000,000 1,000,000 ..........1,000,000

Assuming the interest rate at 18%, compounded annually:

(a) Calculate the net present value of the project (present worth of 18% for 20 years of 5.3527).

(b) Determine whether or not to proceed with the project. Give the reason(s) for your advice.

Reference no: EM132795886

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