Let's break down the **Net Present Value (NPV)** calculation step by step based on the information provided: #### **Given:** - **Initial Investment:** $924,000 - **Annual Net Income:** $58,000 - **Depreciation (non-cash expense):** $77,000 per year - **Project life:** 12 years - **Required rate of return:** 9% - **Present value factor for 12 years at 9%:** 7.16073 #### **Step 1: Calculate Annual Cash Flow** Net income includes depreciation, which is a non-cash expense. So, add depreciation back to net income to get **annual cash flow:** \[ \text{Annual Cash Flow} = \text{Net Income} + \text{Depreciation} = \$58,000 + \$77,000 = \$135,000 \] #### **Step 2: Calculate Present Value of Cash Flows** Multiply the annual cash flow by the present value factor: \[ \text{PV of Cash Flows} = \$135,000 \times 7.16073 = \$966,698.55 \] #### **Step 3: Calculate NPV** Subtract the initial investment from the present value of the cash flows: \[ \text{NPV} = \text{PV of Cash Flows} - \text{Initial Investment} \] \[ \text{NPV} = \$966,698.55 - \$924,000 = \$42,698.55 \] Rounding to **0 decimal places**: \[ \text{NPV} \approx \$42,699 \] --- ### **Final Answer:** \[ \boxed{\$42,699} \] --- **The negative answer you entered likely came from not adding back depreciation to the annual cash flow, or using net income instead of cash flow.**