Chapter 11, Problem 1.3GAP

To determine

Concept introduction:

NPV:

Net present value (NPV) is the method to evaluate the project feasibility. This method calculates the present value of cash inflows and outflows, and then calculates the net present value of the investment. A project should be accepted if it has a positive NPV. The formula to calculate the NPV is as follows:

$\text{NPV = Present value of cash inflows – Present value of cash out flows}$

To calculate:

The Net present value.