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Arte-miy333 [17]
3 years ago
15

You are making a $120,000 investment and feel that a 10 percent rate of return is reasonable given the nature of the risks invol

ved. you feel you will receive $48,000 in the first year, $54,000 in the second year, and $56,000 in the third year. you expect to pay out $12,000 as an additional investment in the fourth year. what is the net present value of this investment given your expectations

Business
1 answer:
Vika [28.1K]3 years ago
5 0

Net Present Value is the difference between the present value of cash flows and the initial investment.

Net Present Value = Present Value of cash flows - Initial Investment

The following image shows the Net Present value of the cash flows:

Net Present Value = $122,142 - $120,000

Net Present Value = $2,142

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