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Bambi Corporation is considering an investment that will cost $80,000 and have a useful life of...

Bambi Corporation is considering an investment that will cost $80,000 and have a useful life of 4 years. The cash flows from the project are expected to be $25,000 per year in the first two years then $20,000 per year for the last two years. If the appropriate discount rate is 10 percent per annum, what is the NPV of this investment (Rounded to the nearest dollar)?

Select one: A. $10,000

B. $9.721

C. -$7,925

D. -$7,204

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Answer #1

Option C
NPV of the investment=-80000+25000/1.1+25000/1.1^2+20000/1.1^3+20000/1.1^4=-7925.005123

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