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Net present value

Which is the net present value of a project that contributes $5,000 at the end of the first year and $8,000 at the end of the second year. The initial cost is $3,000. The appropriate interest rate is 8% for the first year and 9% for the second year.

what I dont get here is if I have to bring the values to the present or the future?

Do I bring the payments to the present, or do I bring the value of the initial cost to the future?

Solution Preview

The net prisent value is calculated by brining all future cash flows to the period zero (now) and then subtracting ...

Solution Summary

Which is the net present value of a project that contributes $5,000 at the end of the first year and $8,000 at the end of the second year?

$2.19