A project has a required return of 12.6 percent, an Initial cash outflow of $42.100, and cash Inflows of $16,500 In Year 1, $11,700 In Year 2, and $10,400 In Year 4. What is the net present value? Multiple Choice

a. - $11,748.69

b. - $10.933.52

c. - $11,208.62

d. - $10.457.09

e. - $12.006.13

a. - $11,748.69

Explanation:

Use following formula to calculate the Present values:

PV = FV / (1+r) ^n

r = 12.6%

1. PV = $16,500 x (1+12.6%) ^-1 = $14,654

2 PV = $11,700 x (1+12.6%) ^-2 = $9,228

3 PV = $10,400 x (1+12.6%) ^-4 = $6,470

Year Cash flow Present Value

0 ($42,100) ($42,100)

1 $16,500 $14,654

2 $11,700 $9,228

4 $10,400 $6,470

NPV $11,748