FIN 3104 Study Guide - Final Guide: Net Present Value
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1 applications: (11. 2) carson trucking is considering whether to expand its regional service center. The expansion will require the expenditure of million on new service equipment and will generate annual net cash in ows by reducing operating costs . 5 million per year for each of the next eight years. In year 8, the rm will also get back a cash ow equal to the salvage value of the equipment which is valued at million. Thus, in year 8, the investment cash in ow will total . 5 million. Calculate the project"s npv using each of the following discount rates: (a) 9 percent (b) 11 percent. ,000,000 as cf0, as it is an expenditure. Subsequently, enter the following: c01 = , 500, 000, f01 = 7 years (year 1 is already included, c02 = , 500, 000 (acts as the year 8 cell) Then, press the npv button on the nancial calculator where i = 9.