A project will produce after-tax operating cash inflows of $3,200 a year for 5 years.The after-tax salvage value of the project is expected to be $2,500 in year 5.The project's initial cost is $9,500.What is the net present value of this project if the required rate of return is 16 percent?
A) -$311.02
B) $2,168.02
C) $4,650.11
D) $9,188.98
E) $21,168.02

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash inflows and salvage value at the required rate of return and subtracting the initial cost. The NPV is $2,168.02.

A Project Will Produce After-Tax Operating Cash Inflows of $3,200