A project initially costs $40,500 and will not produce any cash flows for the first 2 years.Starting in Year 3,it will produce cash flows of $34,500 a year for 2 years.In Year 6,the project will end and should produce a final cash inflow of $12,000.What is the net present value of this project if the required rate of return is 18.5 percent?
A)$2,474.76
B)$2,063.19
C)$1,935.56
D)$1,865.95
E)$2,647.76

Question

Quizplus · Accepted Answer

NPV = -$40,500 + $34,500 / 1.1853 + $34,500 / 1.185⁴ + $12,000 / 1.185⁶ = $2,063.19

A Project Initially Costs $40,500 and Will Not Produce Any