Chapter 4: Net Present Value

Since the PV of the cash inflows, $875,865.52, is less than the cost of the investment, $900,000, you should not make the investment. The net present value, NPV, is the present value of the cash inflows minus the cost of the investment. NPV = PV(Cash Inflows) – Cost of Investment = $875,865.52 – $900,000 = -$24,134.48. The NPV is -$24,134.48. ................
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