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A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each...

A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, what is the approximate net present value of this investment?

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Cost of Capital 0.05 or 5% Hence the discounting factor would be 5% Capia Discount Factor 1-50000 Initial cost Cash Flow 1 20,000 1/1.05A1 19047.62 Cash Flow 2 20,000 1/1.052 18140.59 Cash Flow 3 20,000-1/1.05A3 17276.75 Cash Flow4 20,000 1/1.05A4 16454.05 50,000 NPV 20919.01 Hence the NPV is 20919. Hence the investmengt should be made in the project

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