Question #98806

Project is required in initial investment of ruppes 500000 cash flow after for its estimated life of 4 years are as follows

Year. CFAT

1. 100000

2. 200000

3. 150000

4. 160000

Year. CFAT

1. 100000

2. 200000

3. 150000

4. 160000

Expert's answer

We can calculate net present value (NPV) using this data, but also should know the discount rate during these 4 years, because the formula for NPV is:

"NPV = -I + \\frac{CF1} {(1 + r)^1} + \\frac{CF2} {(1 + r)^2} + ... +\\frac{CFn} {(1 + r)^n},"

where r is discount rate, I is initial investment, CF is cash flow.

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