Scenario: A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm's Weighted Average cost of Capital (WACC) is 12.5%.

• Determine the Discounted Cash Flow (DCF) value of the firm.
• Recommend acceptance of this project using net present value criteria.
• Display your calculations.

Inflows Present Values

Year 1 $575,000.00 $511,111.11

Year 2 $625,000.00 $493,827.16

Year 3 $750,000.00 $526,748.97

Total $1,950,000.00 $1,531,687.24

Terminal Value $8,000,000.00 $5,618,655.69

Totals $9,950,000.00 $7,150,342.94

Initial Investment

NPV

DCF Value $7,150,342.94

Not sure if I did this correctly and how to figure Initial investment or NPV. I thought the initial investment was 5,618.655.69 but not 100%. Stuck on the second bullet which I bolded. If anyone can assist me I would greatly appreciated. Thank you.