Building costs $400,000. Produces inflow after operating costs of $100,000 in year 1, $200,000 in year 2, and $300,000 in year 3. Opportunity cost of capital is 12%. What is the NPV? Thanks!

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- Feb 14th 2010, 06:52 PMnjrocket3 year Net Present Value Question
Building costs $400,000. Produces inflow after operating costs of $100,000 in year 1, $200,000 in year 2, and $300,000 in year 3. Opportunity cost of capital is 12%. What is the NPV? Thanks!

- Feb 14th 2010, 09:41 PMTKHunny
This really is the very simplest of NPV problems. I sincerely hope youare just trying to get someone else to do your homework, because if you're truly struggling with this problem you simply MUST go have a very honest talk with your academic advisor. This class is not working for you.

If i = 0.12, then v = 1/(1+i)

NPV = -400000 + 100000v + 200000v^2 + 300000v^3

There are several ways to add these up, but with only four terms, why bother.