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Net present value

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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?

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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?

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

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