You are offered an investment opportunity that costs you $28,000,has an NPV of $2278,lasts for three years,has interest rate of 10%,and produces the following cash flows: The missing cash flow from year 2 is closest to:

Question

You are offered an investment opportunity that costs you $28,000,has an NPV of $2278,lasts for three years,has interest rate of 10%,and produces the following cash flows:  The missing cash flow from year 2 is closest to:

Quizplus · Accepted Answer

B) NPV = PV benefits - PV of costs 2278 = 10000/(1.10)¹ + X/(1.10)² + 15000/(1.10)³ - 28000 30278 = 10000/(1.10)¹ + X/(1.10)² + 15000/(1.10)³ 30278 = 9091 + X/(1.10)² + 11270 9917 = X/(1.10)² X = 11,999.57

You Are Offered an Investment Opportunity That Costs You $28,000,has