Struggling with NPV: ...if company's discount rate is 12%

[alboriv]

I have been working on this problem for hours and I am not getting an answer to anything CLOSE to what they have. Someone help me please!

Artie's Soccer Ball Company is considering a project with the following cash flows: Initial outlay= $750,000 Incremental alter-tax cash flows from operations Years 1-4 = $250,00 per year. Compute the NPV of this project if the company's discount rate is 12%.

a. $9,337
b. $7,758
c. $4,337
d. $2,534

 

[Denis]

Re: Struggling with NPV......

Calculate PV of the four 250000 flows; subtract 750000 from that.

A = 250000, i = .12, n = 4
Formula for PV: A(1 - v) / i , where v = 1 / (1 + i)^n