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Option 1 Option 2
Discount rate 4.5% Discount rate
Initial investment -$2,000,000 Initial investment
Cashflow in the 1st Year $600,000 Cashflow in the 1st Year
Cashflow in the 2nd Year $800,000 Cashflow in the 2nd Year
Cashflow in the 3rd Year $1,100,000 Cashflow in the 3rd Year
Year Cashflow PV
1 $600,000 $574,163
2 $800,000 $732,584 P / (1 + i)^t
3 $1,100,000 $963,926
Total NPV $2,270,672.90
ption 2
4.5%
-$1,000,000
$420,000
$360,000
$500,000
$169,724.96
13.01%
(1 + i)^t