Cash nftows Cash nflows OdieS Volume Estimate Selling Price ustration: Final out the Net Present value for which a project requires an initial investment of Rs. 25,000 and volves a net cash inflow of Rs. 12,000 each for 3 years. The cost of funds is 8% There is no scrap value. he present value of an annuity of Re 1 for 3 years at 8% per annum is Rs. 2.577. Solution: Calculation of Net Present Value
Cash outflow = 25000 (initial investment)
Cash inflow= 12000
Present value of cash inflow at 8% for 3 years= 12000*2.577
= Rs 30,924
We know that
Net present value= total cash inf...