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Calculating a Project's Net Present Value

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Q. Company A wants a new business. The start up costs are $23 million. The business is expected to get a net income of $2.35 million per year for 13 years. The company uses straight line depreciation to zero salvage value for tax purposes. Assuming a 10% discount rate, what is the project's NPV?

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Solution Summary

This solution shows how to calculate a project's net present value (NPV). The company uses straight line depreciation to zero salvage value for tax purposes.

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NPV = PV of annuity cash flows - initial investment

PV of ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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