Question

You are considering a project which will provide annual cash inflows of $4,289, $5,305, and $5,851 at the end of each year for the next three years, respectively. What is the net present value of the project, given an initial investment of $15,714 and a 6 percent discount rate.

Answer 1

NPV = PV of Cash Inflows - PV of Cash Outflows

Year	CF	PVF@6%	Disc CF
0	$ -15,714.00	1.0000	$ -15,714.00
1	$    4,289.00	0.9434	$    4,046.23
2	$    5,305.00	0.8900	$    4,721.43
3	$    5,851.00	0.8396	$    4,912.61
NPV	$   -2,033.73

As NPV is negative, project is not suggested to accept.