A project has an initial cash outlay of $29,500. Cash inflows are estimated at $1,200, $6,900, $7,800, $9,500, and $4,800 for years 1 through 5, respectively. What is the net present value of this project given a 7% discount rate?
A) ($5,677.15)
B) ($5,314.82)
C) ($2,618.03)
D) $700.00
E) $1,806.33

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting each of the cash inflows at the given discount rate (7%) and subtracting the initial cash outlay. The NPV is negative, indicating the project is not financially viable at this discount rate.

A Project Has an Initial Cash Outlay of $29,500