Given the following data for Project M calculate the NPV of the project.
$\begin{array} { c c c }
&\mathrm { C } _ { 6 } & \mathrm { C } _ { 1 } & \mathrm { C } _ { 2 } \
\text {Cash flow in nominal terms:}&- 100 & 75 & 60 \
\text {Real discount rate = 5 \%}\
\text {Nominal discount rate = 10 \%}\
\end{array}$

A)$25.85
B)$17.77
C)$22.65
D)$35.00

Question

Given the following data for Project M calculate the NPV of the project. 
$\begin{array} { c c c } 
&\mathrm { C } _ { 6 } & \mathrm { C } _ { 1 } & \mathrm { C } _ { 2 } \ 
\text {Cash flow in nominal terms:}&- 100 & 75 & 60 \
\text {Real discount rate = 5 \%}\
\text {Nominal discount rate = 10 \%}\
\end{array}$

A)$25.85
B)$17.77
C)$22.65
D)$35.00

Quizplus · Accepted Answer

To calculate the NPV, discount the cash flows using the nominal discount rate of 10%. NPV = -100 + 75/(1+0.10) + 60/(1+0.10)^2 = $17.77.

Given the Following Data for Project M Calculate the NPV