NPV = Present value of cash inflows – Present Value of cash outflows
=4.81 million*PVAF(7.8%, 3 years) – 8.19 million
= 4.81 million*2.5864 – 8.19 million
= $4.250584 million
Should accept since NPV is positive
Value will increase by the amount of NPV i.e. 4.25 million
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