A project under consideration generates cash flows for eight years. If the initial investment on the project is $2 million, and the project has a payback period of five years, what are the maximum possible (best-case) NPV and the minimum possible (worst-case) NPV?

Assume the cash flows are conventional¹, with the maximum amount of $700,000 (per year) and the minimum amount of $50,000 (per year)². The required return is 12%. (Hint: start with determining the cash flows that maximize/minimize the NPV)

^{1 Conventional cash flows start with negative cash flow at the beginning of the project (like investment) and continue with a positive (or zero) cash flows during the rest of the project life-span}

^{2 Every single cash flow can take any amount between $50,000 and $700,000.}