Find the npv of this project

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Reference no: EM132064436

Company A has been offered a 5 years contract to supply IT services for a customer. If they finally accept to enter that project, they'll have to afford the following expenses: Cost of equipment: 350,000€; Working capital required: 35,000€; Upgrading of equipment after 3 years: 100,000€ and, at the end, the residual value of the equipment will be of 35,000€ In case they decide to enter that project, the annual cash inflow will be 150,000€. The working capital will be released at the end of the project. Company A requires a 15% return, minimum. Find the NPV of this project and if it makes sense for Company A to enter it.

Reference no: EM132064436

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