Problem:

A proposed project requires an initial cash outlay of $849,000 for equipment and an additional cash outlay of $48,500 in year 1 to cover operating costs. During years 2 through 4, the project will generate cash inflows of $354,000 a year.

Required:

Question: What is the net present value of this project at a discount rate of 13 percent?

• -$152,232
• -$66,391
• $67,333
• $128,612
• $239,602

Note: Please provide equation and explain comprehensively and give step by step solution.