Can you please explain how they arrived at the answer given A company is considering investing $50,000 in a project which will yield $5,670 per annum in perpetuity. The company’s cost of capital is 9% per annum. Required: Calculate the net present value of the project.

Ken Garrett says

For a perpetuity, the discount factor is 1/r. Here 1/0.09 = 11.1111

PV of income = 1.111 x 5670 = 63,000

NPV = 63,000 – 50,000 = 13,000

olawaleoke says

Can you please explain how they arrived at the answer given

A company is considering investing $50,000 in a project which will yield $5,670 per

annum in perpetuity. The company’s cost of capital is 9% per annum.

Required:

Calculate the net present value of the project.

answer is $13,000