Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c }
\hline \text { Project } &
\text { Year 0 } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } & \text { Discount } \
&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { rate }\
\hline \text { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \text { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-The net present value (NPV) of project B is closest to?

Question

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c } 
\hline \text { Project } &
\text { Year 0 } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } & \text { Discount } \
&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { Cash Flow }&\text { rate }\
\hline \text { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \text { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-The net present value (NPV) of project B is closest to?

Quizplus · Accepted Answer

The NPV of project B is calculated by discounting each cash flow at the rate of 0.15 and summing them up: NPV = -73 + 30/(1.15) + 30/(1.15^2) + 30/(1.15^3) + 30/(1.15^4) ≈ 12.6.

Use the Table for the Question(s) Below -The Net Present Value (NPV) of Project B Is Closest