BGG Limited is investing £700,000 into a new project today. The project will last for five years. A further investment into the project of £100,000 will be made at the end of year 2 of the project's life. At the end of the five years, all the project assets will be sold for £200,000. Depreciation on project assets is provided on the straight line basis over five years. The net cash inflows from the project in years 1 to 5 are expected to be £200,000, £220,000, £240,000, £280,000 and £260,000. BGG's cost of capital is 15%. What is the net present value of this project?

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The Answer of BGG Limited is investing £700,000 into a new project today. The project will last for five years. A further investment into the project of £100,000 will be made at the end of year 2 of the project's life. At the end of the five years, all the project assets will be sold for £200,000. Depreciation on project assets is provided on the straight line basis over five years. The net cash inflows from the project in years 1 to 5 are expected to be £200,000, £220,000, £240,000, £280,000 and £260,000. BGG's cost of capital is 15%. What is the net present value of this project?

BGG Limited Is Investing £700,000 into a New Project Today