Use the following information to answer the question(s) below.
Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now.
-If the appropriate interest rate is 10%,then Nielson Motors should:
A) Invest in this opportunity since the NPV is positive.
B) Do Not Invest in this opportunity since the NPV is positive.
C) Invest in this opportunity since the NPV is negative.
D) Do Not Invest in this opportunity since the NPV is negative.

Question

Quizplus · Accepted Answer

A) NPV = -1,000,000 + 250,000/(1.10)¹ + 450,000/(1.10)²+ 650,000/(1.10)³ = 87,528.17 Invest since positive NPV

Use the Following Information to Answer the Question(s) Below