The above table shows the future operating profits from an investment. The future operating profits are earned at the end of e the respective years.
-Refer to the table above. If the discount rate is 5 percent and the cost of the investment is $42,000, what is the net present value of the investment?
A)$44,854.77
B)$2,854.77
C)$3,599.22
D)$42,464.22

Question

The above table shows the future operating profits from an investment. The future operating profits are earned at the end of e the respective years.
-Refer to the table above. If the discount rate is 5 percent and the cost of the investment is $42,000, what is the net present value of the investment?
A)$44,854.77 
B)$2,854.77 
C)$3,599.22 
D)$42,464.22

Quizplus · Accepted Answer

The net present value (NPV) is calculated by subtracting the cost of the investment from the present value of future cash flows. If the present value of future cash flows is $44,854.77 and the cost of the investment is $42,000, then the NPV = $44,854.77 - $42,000 = $2,854.77.

The Above Table Shows the Future Operating Profits from an Investment