An initial investment of $8,320,000 on plant and machinery is expected to generate net cash flows of $3,411.000, $4,070,000, $5,824,000, and $2,065,000 at the end of first, second, third and fourth year respectively. At the end of the fourth year, the machinery will be sold for $900,000.
1)Calculate the Net Present Value of the investment if the discount rate is 18%. Round your answer to nearest thousand dollars (show your calculation). If you use the Excel, please capture a screen shot of your schedule and write down the formula you used. Are you going to invest in this project?
2)What are the strengths and weaknesses of the NPV?
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