Use the table for the question(s)below.
Consider the following two projects with cash flows in $:
-The NPV of project B is closest to:
A)$12.64.
B)$23.30.
C)$12.05.
D)$15.00.

Question

Use the table for the question(s)below.
Consider the following two projects with cash flows in $: 
-The NPV of project B is closest to:
A)$12.64. 
B)$23.30. 
C)$12.05. 
D)$15.00.

Quizplus · Accepted Answer

The NPV of project B is closest to $12.64. This is because the NPV is calculated by taking the present value of the future cash flows and subtracting the initial investment. The present value of the future cash flows is calculated by multiplying each cash flow by the discount factor, which is determined by the discount rate. The discount rate is the rate of return that could be earned on an alternative investment with similar risk. In this case, the discount rate is 10%. The initial investment is $100,000. The future cash flows are $20,000 per year for 10 years. The present value of the future cash flows is $132,640. The NPV is $132,640 - $100,000 = $12.64.

Use the Table for the Question(s)below