What is the net present value of a project that contributes $25,000 at the end of the first year and $12,000 at the end of the second year. The initial cost is $33,000. The appropriate interest rate is 7% for the first year and 10% for the second year.
A) $1,579.44
B) $559.90
C) $281.85
D) -$2,148.26

Question

Quizplus · Accepted Answer

The net present value (NPV) is calculated by discounting the cash flows at the given interest rates and subtracting the initial investment. The NPV is $559.90.

What Is the Net Present Value of a Project That