Note: This is not a homework. I teach myself some financial principles and I made up this example to find out if I understood these principles. This example is a just a normal example nothing is real.
Example: I suppose I own a small company, the company wanted to go on a project of making dolls for instance. The initial investment let's say = $200,000 just for example. The firm expects the return after 3 years and it will be $400,000 (just for example). Suppose the project as risky as stocks and investment in stocks offers return of r = 13%.
The Opportunity cost of capital = 13%
PV = 400,000/1.13^3 = 277,220
NPV = 2277,220 - 200,000 = 2077220
Rate of return = profit / investment = -200,000 + 277,220 / 200,000 = 0.39 [39%]
Are my calculations right ? if not, please correct them.