What is the net present value of a project that has a net investment of $148,000 and net cash flows of $25,000 in the first year, $45,000 in years 2-7 and a negative net cash flow of $27,000 in year 8? Assume the cost of capital is 11 percent.
A)$34,302
B)$74,847
C)$57,738
D)-$2,238

Question

Quizplus · Accepted Answer

NPV = $25,000(0.901) + $45,000(4.712 - 0.901) - $27,000(0.434) - $148,000
= $22,525 + $171,495 - $11,718 - $148,000 = $34,302

What Is the Net Present Value of a Project That