The net present value for this investment is:

Question

Quizplus · Accepted Answer

The net present value (NPV) is the present value of all cash inflows minus the present value of all cash outflows. Using the given information, we can calculate the NPV as follows:

NPV = (-$300,000) + ($100,000/1.10) + ($80,000/1.10^2) + ($120,000/1.10^3)
NPV = -$300,000 + $90,909 + $65,041 + $82,417
NPV = $38,367

Since the NPV is positive, the investment is expected to generate a return greater than the required rate of return (10%). Therefore, choice C (positive $24,170) is the best choice.

The Net Present Value for This Investment Is