Question

Green Landscaping, Inc. is using net present value (NPV) when evaluating projects. Green Landscaping's cost of capital is 6.18 percent. What is the NPV of a project if the initial costs are $1,300,664 and the project life is estimated as 5 years? The project will produce the same after-tax cash inflows of $663,711 per year at the end of the year. Round the answer to two decimal places.

Answer 1

Project
Discount rate	0.0618
Year	0	1	2	3	4	5
Cash flow stream	-1300664	663711	663711	663711	663711	663711
Discounting factor	1	1.0618	1.127419	1.197094	1.2710741	1.349627
Discounted cash flows project	-1300664	625081	588699.4	554435.3	522165.45	491773.8
NPV = Sum of discounted cash flows
NPV Project =	1481490.92
Where
Discounting factor =	(1 + discount rate)^(Corresponding period in years)
Discounted Cashflow=	Cash flow stream/discounting factor