Suppose a project requires an initial investment of $10,000 and it will yield $10,500 one year later.The NPV of the project is:

Question

Quizplus · Accepted Answer

The NPV (Net Present Value) is calculated as the present value of cash inflows minus the initial investment. If the project yields $10,500 one year later from a $10,000 investment, the NPV is zero when the discount rate is exactly 5.0% because the $500 return exactly offsets the time value of money at that rate.

Suppose a Project Requires an Initial Investment of $10,000 and It