Question 12 son Systems is considering a project that has an

Question 12 son Systems is considering a project that has an initial cash outflow of $1 million and expected cash inflows of $690,000 per year for the next 3 years. The company uses a WACC of 11% to evaluate these types of projects, what is the project\'s NPV? Your answer should be between 200000 and 700000, rounded to even dollars (although decimal places are okay), with no special characters.

Solution

NPV = Present Value of Cash Inflows - Present Value of Cash Outflows

= [ $ 690,000 * 1/(1.11) ^ 1 +$ 690,000 * 1/(1.11) ^ 2 +$ 690,000 * 1/(1.11) ^ 3] -$ 1000000

= $ 686163.15

Hence the correct answer is 686163.15