What is the net present value of the following cash flows if the relevant discount rate is 5.75 percent? $$\begin{array} { | c | r | }
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & \$ 11,400 \
\hline 1 & - 2,500 \
\hline 2 & - 2,500 \
\hline 3 & - 9,500 \
\hline
\end{array}$$
A)-$1,482.15
B)-$1,232.68
C)$507.19
D)$1,211.40
E)$1,402.02

Question

What is the net present value of the following cash flows if the relevant discount rate is 5.75 percent? $$\begin{array} { | c | r | } 
\hline \text { Year } & \text { Cash Flow } \
\hline 0 & \$ 11,400 \
\hline 1 & - 2,500 \
\hline 2 & - 2,500 \
\hline 3 & - 9,500 \
\hline
\end{array}$$
A)-$1,482.15
B)-$1,232.68
C)$507.19
D)$1,211.40
E)$1,402.02

Quizplus · Accepted Answer

Using a financial calculator or spreadsheet software, we can find the NPV as follows:

CF0 = 11,400
CF1 = -2,500
CF2 = -2,500
CF3 = -9,500
I = 5.75

NPV = -1,232.68

Therefore, the best choice is B, since it is the closest option to the calculated NPV.

What Is the Net Present Value of the Following Cash