A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $35,000, and...


A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $35,000, and $20,000 in the next five years. It will cost $80,000 to implement the project. If the required rate of return is 20%, determine the NPV and indicate if you would recommend this project.

Net Present Value (NPV):

The net present value of a project represents the equivalent worth of an investment as of today. It is predominantly governed by the relevant discount and expected cash flows.

Answer and Explanation: 1

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The calculated NPV of the project is

The net present value (NPV) can be computed by deducting the initial cost from the sum of present values of all...

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How to Calculate Net Present Value: Definition, Formula & Analysis


Chapter 5 / Lesson 20

Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. View some examples on NPV.

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