Which of the following projects has the highest net present value? (Assume the interest rate per year is 10 percent.)
A)$1,000 invested today results in cash inflow next year of $2,100
B)$1,000 invested today results in cash inflow next year of $2,200
C)$1,500 invested today results in cash inflow next year of $2,600
D)$1,500 invested today results in cash inflow next year of $2,700

Question

Quizplus · Accepted Answer

Project B has the highest net present value (NPV) because it results in a cash inflow of $2,200 next year from an investment of $1,000 today. At a 10% interest rate, the NPV of this project is higher than the others when comparing the initial investment to the future cash inflow.

Which of the Following Projects Has the Highest Net Present