project requires an initial outlay of $500,000 and is expected to generate cash inflows of $150,000 per year for 6 years. At the end of the 6th year, the project's assets can be sold for a salvage value of $50,000. The firm's cost of capital is 8%.

Task: Determine the NPV of the project, including the salvage value.

Solution: PVIFA (8%, 6 years) 4.623. PV of Salvage Value = $50,000 / (1 + 0.08)^6 $31,688. NPV = -Initial Investment + (Annual Cash Flows PVIFA) + PV of Salvage Value NPV = -$500,000 + ($150,000 4.623) + $31,688 NPV = -$500,000 + $693,450 + $31,688 NPV = $225,138 ( This solution is teacher provided)

How I am doing is

outlay investment 500,000

expected to generate cash inflows of $150,000 per year for 6 years.

At the end of the 6th year, the project's assets can be sold for a salvage value of $50,000.

The firm's cost of capital is 8%.

PVIFA

1- (1+0.08/0.08)^6=4.623

salvage value Npv( This where I am getting contused i am using scientific calculator )

50,000/(1+0.08)^6= when I solve this bracket I am getting 1.586 when i divide that by 50,000 I am getting 31,525.