1. 3.25 Net Present Value. Your organization must decide on whether to accept a project that has been requested by the research and development department. The initial investment is $350,000. The team has projected that the cash inflows from the project will be $65,000 in the first three years and $85,000 in next three, with a discount rate of 7%. Should the organization authorize the project to go ahead? Why or why not?

Solution:

Discounted Cash Flows and NPV
Year	Inflows	Outflows	Net flow	Discount Factor	NPV
0		350,000
1	65,000
2	65,000
3	65,000
4	85,000
5	85,000
6	85,000
Total