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where
A=future value
P=present value
r=rate of interest
n=time period
=1204100
=[1204100/750,000]^(1/4)-1
=12.56%(Approx)
NPV
The net present value of the project is the present value of cash inflows minus the initial cost,
i.e.,
NPV = 350,0001+8%)
+325,000(1+8%)2+150,000(1+8%)3+180,000(1+8%)4−750,000350,0001+8%)
+325,000(1+8%)2+150,000(1+8%)3+180,000(1+8%)4−750,000
NPV = $104,089.40
The net present value of the project is the present value of the cash inflows minus the initial
cost of the project, i.e.,
65,000(1+10%)+75,000(1+10%)2−95,000=$26,074.3865,000(1+10%)
+75,000(1+10%)2−95,000=$26,074.38