Cash outflows Cash inflows Net cash inflows Year 1 (start) NKr 3.000 NKr 0 NKr (3.000) Year 1 (end) 5.500 5.600 0.100 Year 2 (end) 6.200 8.300 2.100 Year 3 (end) 7.300 9.100 1.800 Year 4 (end) 7.900 9.700 1.800 Year PV discount factor Cash outflows PV of cash outflows Cash inflows PV of cash inflows 0: Year 1 (start) 1: Year 1 (end) 2: Year 2 (end) 3: Year 3 (end) 4: Year 4 (end)
1.000 0.893 0.797 0.712 0.636 NKr 3.000 5.500 6.200 7.300 7.900 NKr 3.0000 4.9115 4.9414 5.1976 5.0244 NKr23.0749 NKr 0 5.600 8.300 9.100 9.700 NKr 0 5.0008 6.6151 6.4792 6.1692 NKr24.2643 The net present value of the Monteiro contract is NKr1.1894 (NKr24.2643 − NKr23.0749) million. An alternative approach to determine the NPV of the Monteiro contract is as follows