We are given the cash flows for Project B over 4 years, with an initial investment at year 0. We are also given the firm's cost of capital, which is the discount rate. We need to calculate the Net Present Value (NPV) of Project B.

1. Problem Description

We are given the cash flows for Project B over 4 years, with an initial investment at year

0. We are also given the firm's cost of capital, which is the discount rate. We need to calculate the Net Present Value (NPV) of Project B.

2. Solution Steps

The formula for NPV is:

$NPV = \sum_{t=0}^{n} \frac{CF_t}{(1+r)^t}$

where:

$CF_t$ = Cash flow at time t

r = discount rate

n = total number of periods

In our case:

$CF_0 = -28000$

$CF_1 = 9000$

$CF_2 = 9000$

$CF_3 = 9000$

$CF_4 = 9000$

$r = 0.1$

$n = 4$

$NPV = \frac{-28000}{(1+0.1)^0} + \frac{9000}{(1+0.1)^1} + \frac{9000}{(1+0.1)^2} + \frac{9000}{(1+0.1)^3} + \frac{9000}{(1+0.1)^4}$

$NPV = -28000 + \frac{9000}{1.1} + \frac{9000}{1.21} + \frac{9000}{1.331} + \frac{9000}{1.4641}$

$NPV = -28000 + 8181.82 + 7438.02 + 6761.83 + 6147.80$

$NPV = -28000 + 28529.47$

$NPV = 529.47$

3. Final Answer

The NPV of project B is $529.47.