Please evaluate the investment below. Is the NPV greater than $50,000? Initial investment: $500,000 Cost of Capital: 8%...

Please evaluate the investment below. Is the NPV greater than $50,000?

Initial investment: $500,000

Cost of Capital: 8%

Cash Flows: -10,000, +2,500, +45,000, +110,000, +250,000, +225,000, +225,000

Expert Solution

Ans Yes the NPV is greater than $ 50000. The NPV is $ 52679.13

Year	Project Cash Flows (i)	DF@ 8%	DF@ 8% (ii)	PV of Project ( (i) * (ii) )
0	-500000	1	1	(5,00,000.00)
1	-10000	1/((1+8%)^1)	0.926	(9,259.26)
2	2500	1/((1+8%)^2)	0.857	2,143.35
3	45000	1/((1+8%)^3)	0.794	35,722.45
4	110000	1/((1+8%)^4)	0.735	80,853.28
5	250000	1/((1+8%)^5)	0.681	1,70,145.80
6	225000	1/((1+8%)^6)	0.630	1,41,788.17
7	225000	1/((1+8%)^7)	0.583	1,31,285.34
		NPV		52,679.13

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