Homework Answers
| Net cash inflow | PV Factor (i=6%) | Present value | |
| Years | |||
| Present value of each year's inflow: | |||
| 1 (n=1) | $ 235,000 | 0.943 | $ 221,605 |
| 2 (n=2) | $ 195,000 | 0.89 | $ 173,550 |
| 3 (n=3) | $ 125,000 | 0.84 | $ 105,000 |
| Total pv of cash inflows | $ 500,155 | ||
| 0 Initial investment | -$ 365,000 | ||
| Net present value of the project | $ 135,155 |
Company should invest in this project, because net present value of the project is positive.
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