The value of the factory is $64,184.00.
Production creates possibilities for capital accumulation greater than agriculture. which means groups in the enterprise, be it Small, Medium, or big, are able to invest in diverse property and to grow capital drift. additionally, the returns to capital in production are higher than in different sectors.
Calculating Net Present Value of the Investment:
Year Cash flows PV Factory at 12% Net Present Value
0 ($400,000) 1 ($400,000.00)
1 $120,000 0.8929 $107,148.00
2 $180,000 0.7972 $143,496.00
3 $300,000 0.7118 $213,540.00
Net Present Value $64,184.00
Yes, this factory investment is a good investment and we should accept this project. Because here this project has got positive Net Present Value. Hence, it is a good investment.
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