Blink of an Eye Company is evaluating a 5year project that w

Blink of an Eye Company is evaluating a 5-year project that will provide cash flows of $41,300, $90,630, $63,570, $61,800, and $45,120, respectively. The project has an initial cost of $196,160 and the required return is 8.3 percent. What is the project\'s NPV?

$8,614.36

$16,245.56

$44,499.81

$9,475.80

$11,824.11

Solution

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=41300/1.083+90630/1.083^2+63570/1.083^3+61800/1.083^4+45120/1.083^5

=$240659.81

NPV=Present value of inflows-Present value of outflows

=$240659.81-$196160

which is equal to

=$44499.81(Approx).