A project requires an initial investment of $300,000. The following cash inflows have been estimated for the life of the project:
| Year | $ |
| 1 | 50,000 |
| 2 | 120,000 |
| 3 | 200,000 |
Using a discount rate of 8%, the net present value of the project to the nearest $’000 is $
| Yr 0: 300,000 X 1 = | (300,000) |
| Yr 1: 50,000 x .926 = | 46,300 |
| Yr 2: 120,000 x .857 = | 102,840 |
| Yr 3: 200,000 x .794 = | 158,800 |
| 7,940 rounds to $8,000 |
Answer: 8,000
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