Calculate the NPV for a project described below. You are the manager of a construction company with a five-year project that has a projected net cash flow of $25,000, $35,000, $45,000, $20,000 and $15,000. Implementation costs are $50,000. The company has a required rate of return of 20%. Compute the discounted cash flow and determine the NPV. Include your calculations in an appendix after the references page. Include information on what projected net cash flow, discounted cash flow and NPV are, why they are useful in project selection, and, given the numbers, if this example project meets the company requirements, and why or why not.
Optional Resources
Review any of the following videos for additional information on how to calculate NPV:
Calculate the Net Present Value of an Investment (Links to an external site.)
Introduce Net Present Value and Internal Rate of Return (Links to an external site.)
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Sample Solution
