Answer:
The correct option is d. $192,369.
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
Your firm is considering an investment that will cost $920,000 today. the investment will produce cash flows of $450,000 in year 1, $270,000 in years 2 through 4, and $200,000 in year 5. the discount rate that your firm uses for projects of this type is 11.25%. what is the investments net present value?
a. $378, 458
b. $540,000
c. $112,583
d. $192,369
The answer to the question is now provided as follows:
Net present value (NPV) is calculated by deducting the present value of cash outflows from the present value of cash inflows over a period of time.
Note: See the attached excel file for the calculation of the net present value (NPV).
From the attached excel file, we have:
r = Discount rate = 11.25%
Net present value (NPV) = 192,369
Therefore, the correct option is d. $192,369.
