The Ampex Corp. manufactures brass fittings for the plumbing industry. It has an opportunity to produce and sell brass components for residential electric fixtures. If it does produce components for electrical fixtures, it will have to spend $500,000 initially. It expects to get a nominal net cash flow of $200,000 in each of the five years life of the project. If the real interest rate is 8 percent per year and the inflation rate is 4 percent per year, what will the NPV of the project be?

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The Answer of The Ampex Corp. manufactures brass fittings for the plumbing industry. It has an opportunity to produce and sell brass components for residential electric fixtures. If it does produce components for electrical fixtures, it will have to spend $500,000 initially. It expects to get a nominal net cash flow of $200,000 in each of the five years life of the project. If the real interest rate is 8 percent per year and the inflation rate is 4 percent per year, what will the NPV of the project be?