Schoultz Corporation has provided the following data concerning an investment project that it is considering: The life of the project is 4 years.The company's discount rate is 12%.The net present value of the project is closest to:

Question

Schoultz Corporation has provided the following data concerning an investment project that it is considering:  The life of the project is 4 years.The company's discount rate is 12%.The net present value of the project is closest to:

Quizplus · Accepted Answer

To calculate the net present value (NPV), we need to discount the cash flows of the project. Using the given data, we get:

NPV = -Initial Investment + PV(Cash Flows)

NPV = -1,200,000 + (630,000/(1+0.12)^1) + (546,000/(1+0.12)^2) + (459,000/(1+0.12)^3) + (384,000/(1+0.12)^4)

NPV = -1,200,000 + 491,071.43 + 383,071.43 + 276,149.33 + 186,505.43

NPV = $108,108

Therefore, the closest net present value of the project is $108,108, which is option C.

Schoultz Corporation Has Provided the Following Data Concerning an Investment