Ajax Corporation is planning a 10 year project that will have an initial cost of $500,000.During the first 2 years, there will be cash outflows of $40,000.Years 3-6 will see cash inflows of $120,000.Years 7-10 will see cash inflows of $200,000.If the company's required rate of return is 9%, determine the NPV of the project.
A)$143,200
B)$225,650
C)$375,800
D)$500,000 Using the BAII Plus Calculator:

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting all cash flows to their present value using the required rate of return and summing them up. The initial cost is a cash outflow at time 0. The cash flows for years 1-2 are outflows, and for years 3-10 are inflows. Using a financial calculator or NPV formula, the NPV is approximately $143,200.

Ajax Corporation Is Planning a 10 Year Project That Will