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A proposed project requires an initial cash outlay of $25,000 for equipment and an additional cash outlay of $8,000 in Year 1 to cover operating costs. During Years 2 through 4, the project will generate cash inflows of $16,000 a year. What is the net present value of this project at a discount rate of 9 percent? Multiple Choice $4,864.53 $3,948.34 $4,238.78 $2,873.44 $4,817.17

Respuesta :

Answer:

$4,817.17

Explanation:

The net present value is the present value of after tax cash flows substracted from the amount invested.

Using a financial calculator:

Cash flow for year zero = -$25,000

Cash flow for year one = -$8,000

Cash flow for year two = $16,000

Cash flow for year three = $16,000

Cash flow for year four = $16,000

I = 9%

NPV = $4,817.17

I hope my answer helps you.

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