Use the table for the question(s)below.
Consider the following two projects with cash flows in $:
-The NPV for project Beta is closest to:
A)$24.01.
B)$16.92.
C)$20.96.
D)$14.41.

Question

Use the table for the question(s)below.
Consider the following two projects with cash flows in $: 
-The NPV for project Beta is closest to:
A)$24.01. 
B)$16.92. 
C)$20.96. 
D)$14.41.

Quizplus · Accepted Answer

To calculate NPV, we discount each cash flow by the given discount rate and then sum all the present values. For Project Beta, the sum of the present values is $150 - $100 + $100/(1.08) + $150/(1.08)^2 - $350/(1.08)^3, which equals $25.56. Subtracting the initial investment of $100 gives us an NPV of $20.56, which is closest to answer choice C ($20.96).

Use the Table for the Question(s)below