Based on the cashflow of Project M and its appropriate cost of capital, the NPV can be calculated to be $465.92.
What is the NPV of Project M?
The NPV is the present value of the cash inflows less the present value of the cash outflows.
= ∑ (Cash inflow / (1 + cost of capital) ^ year of inflow) - Cost outflow
Solving gives:
= 610 / 1.07 + 740 / 1.07² + 780/ 1.07³ + 860/1.07⁴ + 360 / 1.07⁵ - 2,300
= $465.92
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