Answer:
NPV = $ 17,200,000
Step-by-step explanation:
Total expenditures = $ 11,000,000
Net cash inflow = $ 3,000,000 per year
total duration of cash inflow = 9 years
Thus, total cash inflow = $ 3,000,000 per year × 9 years = $ 27,000,000
salvage value = $ 1.2 million = $ 1,200,000
NPV = Salvage value + total cash flow - Expenditures
on substituting the values, we get
NPV = $ 1,200,000 + $ 27,000,000 - $ 11,000,000
or
NPV = $ 17,200,000
