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A. $239,209
B. -$249,335
C. -$138,561
D. $725,000
Southeast Compositions, Inc. is considering a project with the following cash flows: Initial Outlay- $126,000 Cash Flows: Year 1 = $44,000 Year 2 $59,000 Year 3 = $64,000 Compute the net present value of this project if the companys discount rate is 14%
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Answer #1

Net present value = Present value of cash inflows - presen tvalue of cash outflows

Net present value = -126,000 + 44,000 / ( 1 + 0.14)1 + 59,000 / ( 1 + 0.14)2 + 64,000 / ( 1 + 0.14)3

Net present value = -126,000 + 38,596.49 + 45,398.58 + 43,198.18

Net present value = $1,193.25

The options provided are not correct. The computed value of $1,193.25 is correct.

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