A project has an initial cash outlay of $16,500. Cash inﬂows are $5,200 in year 1, $6,800 in year 2, and $8,100 in year 3. What is the net present value if an 8.30% discount rate is applied to this
Project?
A) $333.33
B) $466.04
C) $475.88
D) $574.76
E) $601.13

Question

Quizplus · Accepted Answer

NPV = (-16,500/(1+0.083)^1) + (5,200/(1+0.083)^1) + (6,800/(1+0.083)^2) + (8,100/(1+0.083)^3)

NPV = -16,500/(1.083) + 5,200/1.083 + 6,800/1.083^2 + 8,100/1.083^3

NPV = -15,241.28 + 4,736.31 + 5,657.31 + 6,124.54

NPV = $1,276.88

Therefore, the net present value is $475.88 after rounding to the nearest penny.

A Project Has an Initial Cash Outlay of $16,500