What is the NPV of a project that costs $100,000, provides $23,000 in cash flows annually for 6 years, requires a $5,000 increase in net working capital, and depreciates the asset straight-line over 6 years while ignoring the half-year convention? The discount rate is 14%.
A) -$15,560.04
B) -$13,282.71
C) $3,411.14
D)$14,782.09

Question

Quizplus · Accepted Answer

NPV = -$105,000 + $23,000{(1/.14) - [1/.14(1.14⁶)]} + $5,000/1.14⁶ = -$13,282.71

What Is the NPV of a Project That Costs $100,000