Compute the npv of the investment

Question

Mirar Vision Clinic is considering an investment that requires an outlay of $400,000 and promises a net cash inflow one year from now of $540,000. Assume the cost of capital is 10 percent.

Break the $450,000 future cash inflow into three components:

a.  The return of the original investment	$
b.  The cost of capital	$
c.  The profit earned on the investment	$

2.  Now, compute the present value of the profit earned on the investment. If required, round to the nearest dollar.
$

3.  Compute the NPV of the investment. If required, round to the nearest dollar.

$

Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?