What is the net present value of the following project if the required rate of return is 15%? The initial investment is $150,000. ? $$\begin{array} { | l | l | }
\hline \text { Years } & \text { Cash Flows } \
\hline 1 & \$ 30,000 \
\hline 2 & \$ 80,000 \
\hline 3 & \$ 100,000 \
\hline 4 & \$ 200,000 \
\hline
\end{array}$$
A) $203,690
B) $180,665
C) $150,000
D) $116,681

Question

What is the net present value of the following project if the required rate of return is 15%? The initial investment is $150,000. ? $$\begin{array} { | l | l | } 
\hline \text { Years } & \text { Cash Flows } \
\hline 1 & \$ 30,000 \
\hline 2 & \$ 80,000 \
\hline 3 & \$ 100,000 \
\hline 4 & \$ 200,000 \
\hline
\end{array}$$
A) $203,690
B) $180,665
C) $150,000
D) $116,681

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the future cash flows back to their present value and subtracting the initial investment. Using a discount rate of 15%, the NPV calculation is as follows:$$ NPV = \frac{\$30,000}{(1+0.15)^1} + \frac{\$80,000}{(1+0.15)^2} + \frac{\$100,000}{(1+0.15)^3} + \frac{\$200,000}{(1+0.15)^4} - \$150,000 $$$$ NPV = \$26,086.96 + \$60,273.29 + \$65,843.62 + \$114,475.95 - \$150,000 $$$$ NPV = \$116,679.82 $$Rounded to the nearest dollar, the NPV is approximately \$116,681, which corresponds to option D.

What Is the Net Present Value of the Following Project