Answer:
$13,558
Explanation:
The computation of the Net present value is shown below
= Present value of all annual cash inflows after applying discount factor - initial investment
where,
The Initial investment is $370,000
All yearly cash flows would be
= Annual cash flows × PVIFA for 4 years at 10%
= $121,000 × 3.1699
= $383,558
Refer to the PVIFA table
The discount factor should be computed by
= 1 ÷ (1 + rate) ^ years
So, the net present value would be
= $383,558 - $370,000
= $13,558
