What is the net present value (NPV) of a project that has the following cash flows? The required return is 12.0%.
Year Cash Flow
0 $ (12,000)
1 $ 3,000
2 $ 3,000
3 $ 3,000
4 $ 3,000
5 $ 3,000
6 $ 3,000
Group of answer choices
$ (1,666)
$ 334
None of these are correct.
$ (934) $ 1,066
The correct answer is $ 334
Net Present Value = Present Value of Cash Inflows - Present Value of Cash Outflows
= [ $ 3000 * 1/(1.12) ^ 1 + $ 3000 * 1/(1.12) ^2+$ 3000 * 1/(1.12) ^3+$ 3000 * 1/(1.12) ^4+$ 3000 * 1/(1.12) ^5+$ 3000 * 1/(1.12) ^6] - $ 12,000
= $ 334.22
What is the net present value (NPV) of a project that has the following cash flows?...
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