The following data pertain to an investment in equipment: At the completion of the project,the working capital will be released for use elsewhere.What is the net present value of the project,using a discount rate of 10%?
A) ($1,729).
B) $606.
C) $1,729.
D) $8,271.

Question

The following data pertain to an investment in equipment:  At the completion of the project,the working capital will be released for use elsewhere.What is the net present value of the project,using a discount rate of 10%?
A) ($1,729). 
B) $606. 
C) $1,729. 
D) $8,271.

Quizplus · Accepted Answer

To calculate the net present value of the project, we need to discount the cash flows, which are provided in the table. Using a discount rate of 10%, we can calculate the present values of the cash flows and then sum them up. The calculation gives us a net present value of $606. Therefore, the best choice is B.

The Following Data Pertain to an Investment in Equipment