[Questmaker]

A project that provides annual cash flows of $13,700 for 6 years costs $50,481 today. If the required return is 19 percent, the NPV for the project is $_____and you would accept or reject the project. At a discount rate of _____percent, you would be indifferent between accepting the project and rejecting it. (Negative amount should be indicated by a minus sign.

[morgaine300]

You need to first find the present value of the series of cash flows. I can't really tell you how to do that, because there's at least 4 methods I can think off the top of my head to do it, and I need to know what method you use for that. But regardless, you have 6 years, which is the same as periods since it compounds annually, at 19% per year.

A net present value is the difference between the present value of the cash flows, and the amount invested today.

As for the discount rate... first, if you're indifferent between taking the project and not, what does that mean the net present value has to be? And you'll be solving for a rate there. I could only solve that one on my financial calculator, and they're all different. So I really don't know what to tell you there about solving for that. I know the algebraic equation for it, but solving for rate is the one thing I don't know how to do. (A bit beyond my algebra skills. :-))