A firm is evaluating an investment proposal which has an initial investment of $5,000 and cash flows presently valued at $4,000. The net present value of the investment is ________.
A) -$1,000
B) $9,000
C) $4,000
D) -$4,000

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by subtracting the initial investment from the present value of cash flows. Here, NPV = $4,000 - $5,000 = -$1,000.

A Firm Is Evaluating an Investment Proposal Which Has an Initial