The cash flows and NPV calculation for project C are as follows:
|
(£) |
(£) |
|
|
Initial cost |
50 000 |
|
|
Net cash inflows |
||
|
Year 1 |
10 000 |
|
|
Year 2 |
20 000 |
|
|
Year 3 |
20 000 |
|
|
Year 4 |
3 500 |
|
|
Year 5 |
3 500 |
|
|
Year 6 |
3 500 |
|
|
Year 7 |
3 500 |
64 000 |
|
NPV (at 10% cost of capital) |
(— 1036) |