Sigma ltd. wants to invest in a project that has an initial investment of $40,000. the project is expected to yield $25,000 every year for the next three years. if the expected rate of return is 15%, what is the net present value (npv) of this project? the npv of the project is $

The NPV of the project is $17,080.63.

We follow these steps to arrive at the NPV

We first need to calculate the Present value of the cash flows of each of the years.

Since the project yields $25,000 in each of the three years we can treat the $25,000 as an annuity for 3 years and discount it at 15% to find the Present Value.

We use the following formula for this:

Substituting the values we get,

Next, we calculate NPV as follows:

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