What is the NPV for the following project if its cost of capital is 0 percent and its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4?
A) $1,700,000
B) $371,764
C) $137,053
D) None of the above

Question

Quizplus · Accepted Answer

When the cost of capital is 0 percent, the NPV is simply the sum of the cash inflows minus the initial cost. The total inflows are $6,700,000, so NPV = $6,700,000 - $5,000,000 = $1,700,000.

What Is the NPV for the Following Project If Its