[virtuous1]

Can someone please help me with the solution to this problem. Project K costs $52,125, its expected net cash inflows are $12,000 per year for 8 years, and its WACC is 12%. What is the projects NPV?
I know the IRR is 16%, but how do I get this solution? And the same for the payback period, which I know is 4.34 years?

[bm885]

$52,125/$12,000 = 4.3438, so the payback is about 4 years.

NPV = -$52,125 + $12,000[(1/i)-(1/(I*(1+i)n)]
= -$52,125 + $12,000[(1/0.12)-(1/(0.12*(1+0.12)8)]
= -$52,125 + $12,000(4.9676) = $7,486.20.

Financial calculator: Input the appropriate cash flows into the cash flow register, input I = 12, and then solve for NPV = $7,486.68.

Financial calculator: Input the appropriate cash flows into the cash flow register and then solve for IRR = 16%.