Question

The initial investment in the project is estimated to be $180,000 in year 0, $14,500 in year 1, $16550 in year 2, $18580 in year 3 of the project. Go-Virtual Inc. requires a discount rate of 9%. It is anticipated project future cash inflow as follows (Years 0 to 3): $0, $50,000, $80,000, and $100,000.

make npv positve

Answer 1

Solution:
	CACLULATION OF THE PRESENT VALUE OF INVESTMENT
	Years	Cash Outflow	Cash Inflow	Net Cash Inflow (Outfow)	PVF of $ 1 @ 9%	Present Value (A XB)
	0	$        -1,80,000	$                       -	$                 -1,80,000	1.00000	$        -1,80,000
	1	$            -14,500	$              50,000	$                      35,500	0.91743	$              32,569
	2	$            -16,550	$              80,000	$                      63,450	0.84168	$              53,405
	3	$            -18,580	$          1,00,000	$                      81,420	0.77218	$              62,871
						$            -31,155
		Total Net Present Value of Investment		$            -31,155
	Anwer =
	Net present value of investment is $ - 31,155
	It measn this investment does not make NPV positive