Question

A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash...

A company is considering a project with the following cash flows: Initial Investment = -$200,000 Cash Flows: Year 1 = $140,000 Year 4 = $80,000 Year 5 = $120,000 If the appropriate discount rate is 12%, what is the NPV of this project?

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Answer #1

Solution

Here

NPV = Total Present value of cash inflows-Initial investment

Present value=Cashflow/(1+r)^n

where

r=discounting rate=12%

n= year of cashflow

Calculation for Present values of cash inflow given below

EXCEL FORMULA

Thus NPV=243932.669-200000

=43932.669

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