Please refer to the following data about an investment opportunity: Refer to the following table for PV factors:
How much is the NPV of the project?

Question

Please refer to the following data about an investment opportunity:  Refer to the following table for PV factors:
 How much is the NPV of the project?

Quizplus · Accepted Answer

To calculate the NPV of the project, we need to multiply the cash flows by the corresponding Present Value (PV) factors, and then subtract the initial investment from the sum of the discounted cash flows. Doing so, we get:

NPV = (40,000 x 1) + (60,000 x 0.926) + (80,000 x 0.857) + (100,000 x 0.794) - 300,000
NPV = 40,000 + 55,560 + 68,560 + 79,400 - 300,000
NPV = -$56,480

Therefore, the NPV of the project is negative, meaning the project may not be worth pursuing. The best choice is option A, which is the only negative option.

Please Refer to the Following Data About an Investment Opportunity