The NPV (net present value)of a cash stream that is equal to $75 per period for 5 periods with a rate of return of 10% (.10)per period would be

Question

Quizplus · Accepted Answer

To calculate the NPV, we need to calculate the present value of each cash flow and sum them up. Using the formula for present value of an annuity:
PV = C * (1 - (1 + r)^(-n)) / r
where PV is the present value, C is the cash flow per period, r is the rate of return per period, and n is the number of periods.
Plugging in the given values, we get:
PV = 75 * (1 - (1 + 0.10)^(-5)) / 0.10 = 312.74
Therefore, the NPV is $312.74, which corresponds to choice C.

The NPV (Net Present Value)of a Cash Stream That Is