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Calculating NPV of given investment proposal

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A machine costs $380,000 and is expected to produce the following cash flows:
Year 1 2 3 4 5 6 7 8 9 10

Cash Flows (000s) $50 $57 $75 $80 $85 $92 $92 $80 $68 $50

If the cost of capital is 12 percent, what is the machine's NPV?

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Solution Summary

Solution describes the steps to calculate net present value of given investment proposal.

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Please refer attached file for better clarity of formulas in MS Excel.

Assumptions:
Opportunity cost of capital 12%

Period
0 1 2 3 4 5 6 7 8 9 ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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