Given the following data for Project M calculate the NPV of the project. $\begin{array} { l l l c }
\text { Cash flow in real terms: } & \mathrm { C } _ { 0 } & \mathrm { C } _ { 1 } & \mathrm { C } _ { 2 } \
\text { Real discount rate } = 5 \% & - 200 & 150 & 120 \
\text { Nominal discount rate } = 10 \% & & &
\end{array}$
A)$51.70
B)$35.54
C)$45.21
D)$70.00

Question

Given the following data for Project M calculate the NPV of the project. $\begin{array} { l l l c } 
\text { Cash flow in real terms: } & \mathrm { C } _ { 0 } & \mathrm { C } _ { 1 } & \mathrm { C } _ { 2 } \
\text { Real discount rate } = 5 \% & - 200 & 150 & 120 \
\text { Nominal discount rate } = 10 \% & & &
\end{array}$
A)$51.70
B)$35.54
C)$45.21
D)$70.00

Quizplus · Accepted Answer

The NPV is calculated using the real cash flows and the real discount rate: NPV = -200 + 150/(1+0.05) + 120/(1+0.05)^2 = $51.70.

Given the Following Data for Project M Calculate the NPV