Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 34

Given the following attributes of an investment project with a five-year life, and an after-tax discount rate of 12 percent, calculate the net present value (NPV) and the payback period of the project: investment outlay, year 0, $5,000; after-tax cash inflows, year 1, $800; year 2, $900; year 3, $1,500; year 4, $1,800; and year 5, $3,200. (Use the built-in function of Excel to estimate the NPV of this project.)

Step 1 of 4

The computation of net present value and payback period is presented below by using the spreadsheet:-

The Net Present value is