A given project requires a $30,000 investment and is expected to generate end-of-period annual cash inflows as follows: $$\begin{array} { l l l l }
\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \
\$ 12,000 & \$ 8,000 & \$ 10,000 & \$ 30,000
\end{array}$$ Assuming a discount rate of 10%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c }
i = 10\% & i = 10 \% & i = 10\%\
n = 1 & n = 2 & n = 3 \
.9091 & .8264 & .7513
\end{array}$$
A) $0.00
B) $21,000.00
C) ($7,461.00)
D) $25,033.32
E) ($4,966.68)

Question

A given project requires a $30,000 investment and is expected to generate end-of-period annual cash inflows as follows: $$\begin{array} { l l l l } 
\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \
\$ 12,000 & \$ 8,000 & \$ 10,000 & \$ 30,000
\end{array}$$ Assuming a discount rate of 10%, what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c } 
i = 10\% & i = 10 \% & i = 10\%\
n = 1 & n = 2 & n = 3 \
.9091 & .8264 & .7513
\end{array}$$
A) $0.00
B) $21,000.00
C) ($7,461.00)
D) $25,033.32
E) ($4,966.68)

Quizplus · Accepted Answer

The NPV is calculated as: NPV = (12,000 * 0.9091) + (8,000 * 0.8264) + (10,000 * 0.7513) - 30,000 = 10,909.2 + 6,611.2 + 7,513 - 30,000 = -4,966.68.

A Given Project Requires a $30,000 Investment and Is Expected