The purchase price of a piece of property is $70,000.After analysis of the cash flows,expected sales price,and expected yield,the investor decides the deal has a present value (PV)of $80,000.What is the net present value (NPV),and should the investor take the deal?
A)$10,000;Yes
B)$10,000;No
C)-$10,000;Yes
D)-$10,000;No

Question

Quizplus · Accepted Answer

The NPV is calculated as the present value (PV) minus the purchase price. Here, NPV = $80,000 - $70,000 = $10,000. Since the NPV is positive, the investor should take the deal.

The Purchase Price of a Piece of Property Is $70,000