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.