Enter cash flow at time (t)

0,-8000 1,5000 2,5000  

Enter Discount Rate % (i)

  
      

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Calculate the Net Present Value using:
Cash Flows you entered
Internal Rate of Return (IRR) of 8%

NPV formula:

PI  =	NPV without Initial Investment
	Initial Investment

NPV = ΣPV_t
where PV_t is denoted as

PVt  =	Ct
	(1 + i)t

where C_t = cash flow at time t
and i is the discount rate

Calculate the discount factor

(1 + i) = (1 + 0.08)
(1 + i) = 1.08

Now calculate each PV

Discount back to time 0

Time	Ct)	(1 + i)t	PVt = Ct/(1 + i)t
0	-8,000.00	1.00000	-8,000.00
1	5,000.00	1.08000	4,629.63
2	5,000.00	1.16640	4,286.69

Determine NPV

NPV = ΣPV_t
NPV = -8,000.00 + 4,629.63 + 4,286.69
NPV = 916.32

Since NPV is more than 0
We should pursue the project.