Answer:
-$1,153,204.
reject
Explanation:
Net present value is the present value of after-tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-2,500,000
Cash flow in Year 1 = $275,000
Cash flow in Year 2 = $450,000
Cash flow in Year 3 = $450,000
Cash flow in Year 4 = $475,000
I = 8%
NPV = -$1,153,204.
Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
To find the NPV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
