Answer:
$49,060
Explanation:
We can use the following formula, to calculate the net present value of the project:
Net Present Value
= Annual Cash inflows * Annuity Factor at 8% for 6 Years - Investment
Here
Annual Cash inflow is $220,000
r is 8%
Annuity factor = (1- (1+r)^-n) / r = (1 - (1 + 8%)^-6) / 8% = 4.623
Investment is $968,000
Net Present Value = $220,000 * 4.623 - $968,000
= $49,060