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What is the net present value (NPV) of your proposed expansion into the Canada? Assume that...

What is the net present value (NPV) of your proposed expansion into the Canada? Assume that the cash flows after year 0 occur at the end of each year. The required rate of return is 17.5%. (Round to nearest penny) Year 0 cash flow = -730,000 Year 1 cash flow = -120,000 Year 2 cash flow = 400,000 Year 3 cash flow = 490,000 Year 4 cash flow = 540,000 Year 5 cash flow = 440,000

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Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=400,000/1.175^2+490,000/1.175^3+540,000/1.175^4+440,000/1.175^5

=$1071528.71

Present value of outflows=730,000+120,000/1.175

=832127.66

NPV=Present value of inflows-Present value of outflows

=1071528.71-832127.66

=$239401.05(Approx).

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