Answer:
NPV of the project = $32,404
Explanation:
Provided information we have,
Cash outflow in investment = $39,000
Cash inflow = $26,000 for 4 years
Working capital required = $3,000 through out the life.
Thus, at the beginning of year cash outflow = $39,000 + $3,000 = $42,000
Provided rate of return = 16%
Present value interest factor for 4 years = 2.798
Present value of cash inflow = $2.798 $26,000 = $72,748
Present value of working capital = $3,000 0.552 = $1,656
Total PV of cash inflow = $74,404
Less: PV of cash outflow = $42,000
NPV of the project = $32,404