Answer to Question #200983 in Financial Math for mandona

Question

ZAMBEEF ltd wanted to know their net present value of cash flow if they invest 100000 today. And their initial investment in the project is 80000 for the 3 years of time and they are expecting the rate of return is 10 % yearly. From the above available information, calculate the NPV.

Answer 1

The NPV is:

$NPV = -100,000 + 80,000/1.1 + 80,000/1.1^2 + 80,000/1.1^3 = 98,948.16.$

So, the project will be profitable.