Tuttle Enterprises is considering a project that has the following cash flow and WACC data.What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected.
A)$77.49
B)$81.56
C)$85.86
D)$90.15
E)$94.66

Question

Quizplus · Accepted Answer

To calculate NPV, we need to discount each cash flow using the given WACC of 8% and then sum them up.

NPV = (-$1,000)/(1.08)^1 + $300/(1.08)^2 + $400/(1.08)^3 + $500/(1.08)^4 + $600/(1.08)^5
NPV = -$925.93 + $248.62 + $296.94 + $340.38 + $371.07
NPV = $331.08

Since the NPV is positive, we should accept the project. 
Among the answer choices, only option C matches the calculated NPV.

Tuttle Enterprises Is Considering a Project That Has the Following