Homework Answers
Ans:
computation of net present value
Net Present value = cash flow * Discounting factor
Discounting factor = 1/(1+r)^n
Sum of discounting factor for year 1 to year 5 = 4.3294
Net Present Value = -120,000 * 1/(1+0.05)^0 + 130,000 * sum of discounting factor for year 1 to year 5
= -120,000 * 1 + 130,000 * 4.3294
= -120,000 + 562,822
= 442822
Since the net present value is positive, he should do the training.
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