Molly is considering a project with cash inflows of $811,$924,$638,and $510 over the next four years,respectively.The relevant.discount rate is 11.2 percent.What is the net present value of this project if it the start-up cost is $2,700?
A)-$425.91
B)-$131.83
C)-$383.01
D)$10.45
E)$229.50

Question

Quizplus · Accepted Answer

The correct answer is A. The net present value of the project is -$425.91. This is calculated by taking the present value of the cash inflows and subtracting the start-up cost. The present value of the cash inflows is $2,700/(1.112^1) + $924/(1.112^2) + $638/(1.112^3) + $510/(1.112^4) = $2,425.91. The net present value is $2,425.91 - $2,700 = -$425.91.

Molly Is Considering a Project with Cash Inflows of $811,$924,$638,and