CFA Level 1
Corporate Finance

Calculating NPV Considering Cash Flows

Hard Capital Budgeting Cash Flow Estimation

A company is considering a new project that requires an initial investment of $500,000. The project is expected to generate cash flows of $150,000 in Year 1, $200,000 in Year 2, and $250,000 in Year 3. The company has a discount rate of 10% and plans to calculate the Net Present Value (NPV) of the project. One of the considerations is the working capital requirements, which amount to $50,000 upfront and will be recovered in Year 3.

Based on the information provided, what will be the project's NPV considering the cash flows, initial investment, and working capital recovery?

Hint

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