The TRC Corporation wants to add some equipment to its production process.

The
equipment costs P225,000 and would result to the following profits:

Year Cash Inflow

1 95,000

2 80,000

3 60,000

4 55,000

Solution:
95,000 80,0 00 60,0 00 55,000
NPV = 1
+ 2
+ 3
+ 4
(1.12) (1.12) (1.12) (1.12)

225,000 - = 84,821.43 + 63,775.51 + 42,706.51 + 34,953.49

NPV = 226,257.24 + 225,000
NPV = 1,257,24