Chee company has gathered the following data on a proposed investment project? Investment required in equipment : 240,000$ Annual cash inflows : 50,000$Salvage value: 0$ Life of the investment: 8 years  Requried rate of return : 10% Assets will be depreciated using straight line deperciation method.  Required:  Using the net Present value and the interval rate of return methods, Is this a good investment?

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.