Answer:
Net present value = -$18,375
Explanation:
According to the information provided,
Initial investment = $239,800
The project produces an operational cash flow of $56,200 annually for 5 years.
Thus, the present value of cash flows is:
PMT = $56,200
N = 5 years
Rate = 15.2%
Future value (FV) = $0
We apply the following formula:
= -PV(RATE,NPER,PMT,FV,0)
The resulting present value is $187,502.
Now, considering:
FV = $67,000
n = 5 years
Rate = 15.2%
PMT = $0
We again use the formula:
= -PV(RATE,NPER,PMT,FV,0)
The present value is $33,023.
Consequently, the net present value is calculated as:
= ($33,023 + $187,502) - $238,900
= -$18,375