Contract price

Hello Sir, Q 86 on Kaplan 2022-2023 Exam kit A  company  is  considering  investing  in  a  two?year  project.  Machine  set?up  costs  will  be $125,000,  payable  immediately.  Working  capital  of  $4,000  is  required  at  the  beginning  of the contract and will be released at the end.  Given  a  cost  of  capital  of  10%,  what  is  the  minimum  acceptable  contract  price  (to  the nearest thousand dollar) to be received at the end of the contract?  $    In the above question it is asking the minimum contract price The cash flows was discounted and the NPV was divided by the discount factor to give the minimum price of the contract. I am not able to understand the logic behand this calculation can you please clarify the amount of $152,000 as minimum contract price Why we divide the NPV again to get the contract price , Thanks, Answer $152,000  PV of contract price should just cover the PV of the project costs to be acceptable.  Time  Flow  Discount @ 10% pv    0 (125000) 1 (125000) 1 (4000) 1 (4000) 2 4000 0.826 3304 --------- -125696     ________     Therefore, contract price @ time 2 × 0.826 = 125,696  Price = 125,696/0.826 = $152,174 or $152,000 to the nearest $000.