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Example 1:

NPV =
Ct
¿¿

PV =
20,000 + 25000 + 30,000 + 15,000 = 71,182.50
¿¿ ¿¿ ¿¿ ¿¿
 NPV = 71,182.50-80,000 = -6,817.5 (dollars) < 0
 We should not go ahead this project

Exercise 2:

NPV =
Ct
¿¿

PV =
30 ,000 + 35000 + 3 0,000 + 35,000 = 145447.31
¿¿ ¿¿ ¿¿ ¿¿
 NPV = 145,447.31 – 115,000 = 30,447.31 >0
 We should go ahead this project

Exercise 3:

NPV =
Ct
¿¿
Project A

NPV =
20,000 + 25000 + 20,000 + 3 0 ,000 -100,000= 1,129.96 dollars
¿¿ ¿¿ ¿¿ ¿¿
Project B:

NPV =
25 ,000 -100,000= dollars
¿¿

 NPV = 145,447.31 – 115,000 = 45,447.31 >0


 We should choose both of them, because they have positive NPV ( 1,29,96 and 2,504.94
dollars).
 Project B is better because it has higher NPV than that of project A

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