Which of the following amounts is closest to the net present value of a project that contributes $10,000 at the end of the first year and $5,000 at the end of the second year. The initial cost is $8,000 and the appropriate interest rate is 10%.
A) $5,223
B) $5,951
C) $7,000
D) $21,223
E) $23,000

Question

Quizplus · Accepted Answer

The NPV is calculated as: NPV = -8000 + (10000 / (1+0.1)^1) + (5000 / (1+0.1)^2) = $5,223.

Which of the Following Amounts Is Closest to the Net