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Calculate the project NPV using a discount rate

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Question - Net present value calculation - Carson Trucking is considering whether to expand its regional service center in Mohab, UT. The expansion requires the expenditure of $9,000,000 on new service equipment and would generate annual net cash inflows from reduced costs of operations equal to $2,000,000 per year for each of the next 7 years. In year 7 the firm will also get back a cash flow equal to the salvage value of the equipment, which is valued at $0.9 million. Thus, in year 7 the investment cash inflow totals $2,900,000. Calculate the project's NPV using a discount rate of 8 percent.

Reference no: EM132915531

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