Compute the NPV statistic for Project U given the following cash flows if the appropriate cost of capital is 9 percent.
Project U
$$\begin{array} { l l l l c c c c }
\text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash Flow } & - \$ 1,000 & \$ 350 & \$ 1,480 & - \$ 520 & \$ 400 & - \$ 100
\end{array}$$
A) $201.69
B) $273.82
C) $383.63
D) $397.21

Question

Compute the NPV statistic for Project U given the following cash flows if the appropriate cost of capital is 9 percent.
Project U
$$\begin{array} { l l l l c c c c } 
\text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash Flow } & - \$ 1,000 & \$ 350 & \$ 1,480 & - \$ 520 & \$ 400 & - \$ 100
\end{array}$$
A) $201.69
B) $273.82
C) $383.63
D) $397.21

Quizplus · Accepted Answer

The NPV (Net Present Value) of Project U can be calculated using the formula: $$NPV = \sum \frac{CF_t}{(1 + r)^t}$$ where $CF_t$ is the cash flow at time $t$, and $r$ is the discount rate (9% or 0.09 in this case). Plugging in the values:$$NPV = -\$1,000 + \frac{\$350}{(1 + 0.09)^1} + \frac{\$1,480}{(1 + 0.09)^2} + \frac{-\$520}{(1 + 0.09)^3} + \frac{\$400}{(1 + 0.09)^4} + \frac{-\$100}{(1 + 0.09)^5}$$$$NPV = -\$1,000 + \$321.10 + \$1,243.39 - \$402.11 + \$294.98 - \$73.73$$$$NPV = \$383.63$$Therefore, the correct NPV statistic for Project U, given the cash flows and a cost of capital of 9 percent, is $383.63.

Compute the NPV Statistic for Project U Given the Following