Aerospace Dynamics will invest $199,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5 160,000 a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value $ b. Should the project be undertaken? No Yes Solution Aerospace Dynamics will invest $199,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5 160,000 a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value $ b. Should the project be undertaken? No Yes Aerospace Dynamics will invest $199,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5 160,000 a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value $ b. Should the project be undertaken? No YesYearCash flowsPV @ 10%Present Value0($199,000)1($199,000)1$51,0000.909090909$46,3642$51,0000.826446281$42,1493$55, 0000.751314801$41,3224($51,000)0.683013455($34,834)5$160,0000.620921323$99,347NPV( $4,652)The project should not be undertaken because NPV is negative.

1. Aerospace Dynamics will invest $199,000 in a project that will produce the following cash
flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use
Appendix B for an approximate answer but calculate your final answer using the formula and
financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5
160,000 a. What is the net present value of the project? (Negative amount should be indicated by
a minus sign. Do not round intermediate calculations and round your answer to 2 decimal
places.) Net present value $ b. Should the project be undertaken? No Yes
Solution
Aerospace Dynamics will invest $199,000 in a project that will produce the following cash
flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use
Appendix B for an approximate answer but calculate your final answer using the formula and
financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5
160,000 a. What is the net present value of the project? (Negative amount should be indicated by
a minus sign. Do not round intermediate calculations and round your answer to 2 decimal
places.) Net present value $ b. Should the project be undertaken? No Yes
Aerospace Dynamics will invest $199,000 in a project that will produce the following cash
flows. The cost of capital is 10 percent. (Note that the fourth year’s cash flow is negative.) Use
Appendix B for an approximate answer but calculate your final answer using the formula and
financial calculator methods. Year Cash Flow 1 $ 51,000 2 51,000 3 55,000 4 (51,000 ) 5
160,000 a. What is the net present value of the project? (Negative amount should be indicated
by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal
places.) Net present value $ b. Should the project be undertaken? No YesYearCash flowsPV @
10%Present
Value0($199,000)1($199,000)1$51,0000.909090909$46,3642$51,0000.826446281$42,1493$55,
0000.751314801$41,3224($51,000)0.683013455($34,834)5$160,0000.620921323$99,347NPV(
$4,652)The project should not be undertaken because NPV is negative