Bevans Corporation is considering a capital budgeting project that would require an initial investment of $190,000. The investment would generate annual cash inflows of $58,000 for the life of the project, which is 4 years. The company's discount rate is 7%. The net present value of the project is closest to:
A)$190,000
B)$6,446
C)$196,446
D)$42,000

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash inflows at the company's discount rate and subtracting the initial investment. The NPV is approximately $6,446.

Bevans Corporation Is Considering a Capital Budgeting Project That Would