NPV = Present value of Cash Inflows  Present value of Cash Outflows.
PV OF CASH INFLOW = 480,000*5.650233= 2,712,107
PV OF CASH OUTFLOW=2,700,000
NPV= 2,712,1072,700,000=12,107
Selection Criteria: If NPV > 0, i.e., if NPV is positive, the project is acceptable
YEAR 
CASH INFLOW 
PV @12% 
PRESENT VALUE OF CASH INFLOW 

1 
480,000 
1/1.12^1= 0.892857 
428571 

2 
480,000 
1/1.12^2 =0.797194 
382653 

3 
480,000 
0.71178 
341655 

4 
480,000 
0.635518 
305049 

5 
480,000 



6 
480,000 
0.506631 


7 
480,000 

217128 

8 
480,000 
0.403883 


9 
480,000 
0.36061 


10 
480,000 



TOTAL PRESENT VALUE OF CASH INFLOW 
2,712,107 

0 
CASH OUTFLOW (INITIAL INVESTMENT) 
(2,700,000) 

NET PRESENT VALUE 
12,107 
NPV = Present value of Cash Inflows  Present value of Cash Outflows.
PV OF CASH INFLOW = 52,500* 4.62288= 242,701
PV OF CASH OUTFLOW=270,000
NPV= 242,701270,000= (27299)
Selection Criteria: If NPV < 0, i.e., if NPV is negative, the project is not acceptable
If estimated annual cash inflow is $135,000
PV OF CASH INFLOW = 135,000* 4.62288= 624,089
PV OF CASH OUTFLOW=270,000
NPV= 624,089270,000= 354,089
Selection Criteria: If NPV > 0, i.e., if NPV is positive, the project is acceptable
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