Question

A company has a minimum required rate of return of 8% and is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for three years. What would be the net present value of this project?

Answer 1

Answer: $5,396.79

Explanation:

The net present value is value of the after tax cash flows from an investment minus the value of the amount invested.

The net present value can be found using a financial calculator.

Cash flow for year zero = $-175,000

Cash flow for each year from year 1 to year 3 = 70,000

I = 8%

NPV =$5,396.79

I hope my answer helps you