Answer:
-$419.41
Explanation:
The computation is shown below:
Year Cash flows Discount factor Present value
0 -$196,000 1 -$196,000 (A)
1 $45,000 0.9090909091 $40,909.09
2 $60,000 0.826446281 $49,586.78
3 $54,000 0.7513148009 $40,571.00
4 -$51,000 0.6830134554 -$34,833.69
5 $160,000 0.6209213231 $99,347.41
Total present value $195,580.59 (B)
Net present value -$419.41 (A - B)
The discount factor is computed below:
= (1 + interest rate)^number of years
