What is the net present value of a project that requires a $100 investment today and returns $50 at the end of the first year and $80 at the end of the second year? Assume a discount rate of 10%.

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Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the future cash flows to the present value and subtracting the initial investment. NPV = ($50 / (1+0.10)^1) + ($80 / (1+0.10)^2) - $100 = $11.57.

What Is the Net Present Value of a Project That