Answer:
NPV = 138,347.55
Explanation:
<em>Net Present Value (NPV) : This is one of the techniques available to evaluate the feasibility of an investment project. The NPV of a project is the difference between the present value of the cash inflows and the cash outflows of the project.</em>
We sahall compute theNPV of this project by discounting the appropriate cash flows as follows:
<em>Prevent Value of operating cash flow</em>
PV =A× (1- (1+r)^(-n))/r
A- 23,900, r - 12%, n- 5
PV = $23,900 × (1- (1.12)^(-5))/0.05
=206,769.963
<em>PV of Working Capital recouped</em>
PV = 5600× 1.12^(-5)
= 3,177.59
NPV = initial cost + working capital + Present Value of working capital recouped + PV of operating cash inflow
NPV = (66,000) + (5600) + 3,177.59 + 206,769.96
NPV = 138,347.55