1. **Stating the problem:** We need to calculate the Net Present Value (NPV) of a project where the initial investment is 150000 and annual cash inflows are 50000 for 5 years. The cost of capital (discount rate) is 10%. 2. **Calculate the present value (PV) factor for each year using formula:** $$PV\ Factor = \frac{1}{(1 + r)^n}$$ where $r = 0.10$ and $n$ = year number. 3. **Calculate the PV factors rounded to 3 decimal places:** - Year 1: $\frac{1}{(1 + 0.10)^1} = 0.909$ - Year 2: $\frac{1}{(1 + 0.10)^2} = 0.826$ - Year 3: $\frac{1}{(1 + 0.10)^3} = 0.751$ - Year 4: $\frac{1}{(1 + 0.10)^4} = 0.683$ - Year 5: $\frac{1}{(1 + 0.10)^5} = 0.621$ 4. **Calculate the present value of cash inflows for each year:** - Year 1: $50000 \times 0.909 = 45450$ - Year 2: $50000 \times 0.826 = 41300$ - Year 3: $50000 \times 0.751 = 37550$ - Year 4: $50000 \times 0.683 = 34150$ - Year 5: $50000 \times 0.621 = 31050$ 5. **Sum the PV of cash inflows:** $$45450 + 41300 + 37550 + 34150 + 31050 = 189500$$ 6. **Calculate NPV:** $$NPV = \text{Sum of PV of inflows} - \text{Initial investment} = 189500 - 150000 = 39500$$ 7. **Decision:** Since NPV $>$ 0 (39500 $>$ 0), the project is profitable. The company should proceed with the investment.