A company is considering an iron ore extraction project which requires an initial investment of $500,000 and will yield annual cash flows of $150,000 for 4 years. The company's hurdle rate is 9%. What is the NPV of the project? $$\begin{array} { | l | l | l | l | }
\hline & 3 \% & 9 \% & 10 \% \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 5.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

Question

A company is considering an iron ore extraction project which requires an initial investment of $500,000 and will yield annual cash flows of $150,000 for 4 years. The company's hurdle rate is 9%. What is the NPV of the project? $$\begin{array} { | l | l | l | l | } 
\hline & 3 \% & 9 \% & 10 \% \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 5.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of A company is considering an iron ore extraction project which requires an initial investment of $500,000 and will yield annual cash flows of $150,000 for 4 years. The company's hurdle rate is 9%. What is the NPV of the project? $$\begin{array} { | l | l | l | l | } 
\hline & 3 \% & 9 \% & 10 \% \
\hline 1 & 0.926 & 0.917 & 0.909 \
\hline 2 & 1.783 & 1.759 & 1.736 \
\hline 3 & 2.577 & 2.531 & 2.487 \
\hline 4 & 3.312 & 3.24 & 3.17 \
\hline 5 & 3.993 & 3.89 & 3.791 \
\hline 6 & 4.623 & 4.486 & 4.355 \
\hline 7 & 5.206 & 5.033 & 4.868 \
\hline 8 & 5.747 & 5.535 & 5.335 \
\hline 9 & 5.247 & 5.995 & 5.759 \
\hline 10 & 6.71 & 6.418 & 6.145 \
\hline
\end{array}$$

A Company Is Considering an Iron Ore Extraction Project Which