A given project requires a $25,000 investment and is expected to generate end-of-period annual cash inflows as follows:
$$\begin{array} { c c c c }
\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \
\hline \$ 4,000 & \$ 15,000 & \$ 6,000 & \$ 25,000
\end{array}$$
Assuming a discount rate of 10%,what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c }
i = 10 \% & i = 10 \% / 4 & i = 10 \% / 1 \
n = 1 & n = 2 & n = 3 \
\hline .9091 & .8264 & .7513
\end{array}$$
A) $6,217.50
B) ($4,459.80)
C) ($6,217.50)
D) $8,275.00
E) $0.00

Question

A given project requires a $25,000 investment and is expected to generate end-of-period annual cash inflows as follows:
$$\begin{array} { c c c c } 
\text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \
\hline \$ 4,000 & \$ 15,000 & \$ 6,000 & \$ 25,000
\end{array}$$
Assuming a discount rate of 10%,what is the net present value of this investment? Selected present value factors for a single sum are shown in the table below:
$$\begin{array} { c c c } 
i = 10 \% & i = 10 \% / 4 & i = 10 \% / 1 \
n = 1 & n = 2 & n = 3 \
\hline .9091 & .8264 & .7513
\end{array}$$
A) $6,217.50
B) ($4,459.80)
C) ($6,217.50)
D) $8,275.00
E) $0.00

Quizplus · Accepted Answer

.9091($4,000) + .8264($15,000) + .7513($6,000) - $25,000 = ($4,459.80)

A Given Project Requires a $25,000 Investment and Is Expected