Question

What is the net present value of a project with the following cash flows and a...

What is the net present value of a project with the following cash flows and a required return of 11 percent?

  

Year Cash Flow
0 –$30,400
1 16,800
2 21,530
3 4,000

Multiple Choice

  • $5,455.86

  • $-5,455.86

  • $5,134.13

  • $3,402.45

  • -$5,134.13

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Answer #1

ANswer is

  • $5,134.13

Year Cash Flow PV factor 11% PV
0 -30400 1.0000 -30400
1 16800 0.9009 15135.13
2 21530 0.8116 17474.23
3 4000 0.7312 2924.76
Net present Value 5,134.13
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Answer #2

C. $5,134.13

NPV = -$30,400 + $16,800/(1.11) + $21,530/(1.11)2 + $4,000/(1.11)3 = $5,134.13

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