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Calculating the NPV for a new machine

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A company is looking to add a new machine at a cost of $4,133,250. The company expects this equipment will lead to cash flows of $817,322, $863,275, $937,250, $1,018,610, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment?

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The solution depicts the steps to calculate the NPV in the given case.

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Discount rate=r=15%
Initial cash flow=CF0=-$4,133,250
Cash Flow at the end of year 1=CF1=817,322
Cash Flow at the end of year ...

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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