Suppose you plan to star your own business in few years. Based on project sales and costs, You expected that the cash flows over the Five years life of the business will be as follows:
Year 1 $1,500
Year 2 $3,000
Year 3 $4,000
Year 4 $5,000
Year 5 $6,000
It will cost about $20,000 to begin the new business. You use a 8% discount rate to evaluate new business operation.
[1] What is Present Value
[2] What is NPV
[3] Explain – will you suggest to take this project