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CFA Level 1
Corporate Finance

Net Present Value Calculation for Cash Flows

Easy Capital Budgeting Cash Flow Estimation

During the capital budgeting process, a company evaluates a potential investment in new manufacturing equipment. The following cash flows are expected over a 5-year period: Year 1: $50,000; Year 2: $70,000; Year 3: $80,000; Year 4: $90,000; Year 5: $100,000. Additionally, the company expects an initial investment of $300,000 and that the cash flows will be before tax. If the company applies a discount rate of 10%, what is the total net present value (NPV) of the project?

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