Consider a 12-year project that costs $48,000 today and will produce after-tax cash flows of $6,000 each year for the first four years, $7,000 each year for the next four years, and $8,000 each year for the last four years.If the cost of capital is 8 %, what is the project's NPV?

Question

Quizplus · Accepted Answer

The correct answer is C because the NPV of the project is $3,230. The NPV is calculated by taking the present value of the cash flows and subtracting the initial investment. The present value of the cash flows is calculated by multiplying each cash flow by the present value factor, which is calculated using the cost of capital and the number of years until the cash flow is received.

Consider a 12-Year Project That Costs $48,000 Today and Will