The Cambro Foundation, a nonprofit organization, is planning to invest $152,837

Question

The Cambro Foundation, a nonprofit organization, is planning to invest $152,837 in a project that will last for three years. The project will produce net cash inflows as follows: ear 59,000 Year 2 ,000 Year 3 Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table Required: Assuming that the project will yield exactly a 9% rate of return, what is the expected net cash inflow for Year 3? Answer is complete but not entirely correct. Net cash inflow 56,980

Explanation / Answer

Answer)

Here given that project will yeilding exactly 9% rate of return i.e the amount yeilded must be equal to initial investment after the rate of return of 9%.

The amount earned till now:

Year 1=$59000×0.917=$54103

Year 2=$65000×0.842=$54730

Investment till to return =$152837-$54103-$54730

=$44004

Net cash inflow for year 3=$44004/0.772=$57000

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