A proposed project costs $300 and has cash flows of $80,$200,$75,and $90 for Years 1 to 4,respectively.Because of its high risk,the project has been assigned a discount rate of 16 percent.In dollars,how much will this project return in today's dollars for every $1 invested?
A)$1.01
B)$.99
C)$1.05
D)$.97
E)$1.03

Question

Quizplus · Accepted Answer

The project will return $1.05 in today's dollars for every $1 invested. The present value of the cash flows is $300 + $80/(1.16) + $200/(1.16)^2 + $75/(1.16)^3 + $90/(1.16)^4 = $315.52. The project will therefore return $1.05 in today's dollars for every $1 invested.

A Proposed Project Costs $300 and Has Cash Flows of $80,$200,$75,and