Capital Budgeting using Net Present Value Method PV of Cost of Investment PV of Net Cashflow: Net Present Value Year 1 2 3 4 5 Initial investment = 2,700,000 Net Income + Depreciation 424,136.33 518,972.18 655,465.06 804,369.79 944,783.16 PV Factor of 12% 0.8929 0.7972 0.7118 0.6355 0.5674 Present Value of Net Cashflow 2,807,294.61 631,449.13 703,622.11 366,400.07 351,076.44 335,063.91 2,387,611.66 -419,682.95

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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can u explain how did they get this digit, use excel and pls pic the formula

Capital Budgeting using Net Present Value Method
PV of Cost of Investment
PV of Net Cashflow:
Net Present Value
Year
1
2
3
4
5
Initial investment = 2,700,000
Net Income +
Depreciation
424,136.33
518,972.18
655,465.06
804,369.79
944,783.16
PV Factor of
12%
0.8929
0.7972
0.7118
0.6355
0.5674
Present Value of
Net Cashflow
631,449.13
703,622.11
366,400.07
351,076.44
335,063.91
2,807,294.61
2,387,611.66
-419,682.95
Transcribed Image Text:Capital Budgeting using Net Present Value Method PV of Cost of Investment PV of Net Cashflow: Net Present Value Year 1 2 3 4 5 Initial investment = 2,700,000 Net Income + Depreciation 424,136.33 518,972.18 655,465.06 804,369.79 944,783.16 PV Factor of 12% 0.8929 0.7972 0.7118 0.6355 0.5674 Present Value of Net Cashflow 631,449.13 703,622.11 366,400.07 351,076.44 335,063.91 2,807,294.61 2,387,611.66 -419,682.95
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