Does npv and bcr support the investment

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As of December 31, 2020, your company, Timo Inc., is considering a five-year contract with a client to offer compensation consulting services on a fee basis. You have a one- time cost of $200 thousand. Your expected free cash flow from this service over the term of the contract is expected to be:

YEAR 2021 2022 2023 2024 2025

FREE CASH FLOW ($ thousands) $57 $82 $86 $107 $188

You would like to know what this contract is worth now as you consider using the same three staff for other projects or contracts.

The discount rate commensurate of this contract is 12%.

1. What is NPV

2. What is BCR

3. Does NPV and BCR support the investment? Why or why not?

Reference no: EM132928353

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