The Seattle Corporation has been presented with an investment opportunity which will yield end-of-year cash flows of $30,000 per year in Years 1 through 4, $35,000 per year in Years 5 through 9, and $40,000 in Year 10. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. What is the NPV for this investment

Net present price, or NPV, is used to calculate the cutting-edge overall price of a destiny movement of payments. If the NPV of a project or funding is fine, it method that the discounted present fee of all future coin flows related to that challenge or funding might be wonderful, and consequently attractive.

The net present value or internet gift really worth applies to a chain of cash flows going on at distinctive instances. The existing fee of a coin glide relies upon the c program language period of time between now and the coins go with the flow. It also relies upon on the cut price price. NPV bills for the time cost of cash.

For example, if a safety gives a chain of coins flows with an NPV of $50,000 and an investor can pay precisely $50,000 for it, then the investor's NPV is $zero. It method they may earn something the bargain fee is on the safety.

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