Millie is risk manager of JKL Company.She is considering an investment in a loss control project.The project will cost $40,000.Assuming a 10 percent discount rate,the present value of the future cash flows that this project will generate is $60,000.What is the net present value (NPV)of this project?
A)$20,000
B)$26,000
C)$60,000
D)$100,000

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by subtracting the initial investment from the present value of future cash flows. Here, NPV = $60,000 - $40,000 = $20,000.

Millie Is Risk Manager of JKL Company