Jane needs a new floor. It will take $100,000
She thinks that he can improve revenue through fewer misdirected sales inquiry calls, resulting in higher sales. Through analysis, she has determined that improvement to cash flow for the company will be $40,000 in years one through five. Thus, the time horizon is five years and you will get the benefit at the end of the year.
Your company can get 10% on invested funds (the market rate of return).
Calculate the NPV
What is the project's payback period?
First write the cash flow
Year Cash Flow
The solution determines a projects payback period.