What is the NPV for the following project if its cost of capital is 12% and its initial after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows 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) ($1,494,336)
B) $1,494,336
C) $4,321,914
D) ($4,321,914)

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the future cash flows back to their present value and then subtracting the initial investment. Using a discount rate of 12%, the NPV for this project is negative, indicating that the project's returns do not cover its costs, including the cost of capital. The correct calculation leads to an NPV of approximately ($1,494,336).

What Is the NPV for the Following Project If Its