A new project has an initial cost of $125,000 and cash flows of $33,300,$78,700,and $69,500 for Years 1 to 3,respectively.What is the net present value (NPV)of this project if the discount rate is 19.3 percent? What is the NPV if the discount rate is 12.7 percent?
A)$1,127.10; $17,209.11
B)-$859.11; $17,209.11
C)-$859.11; $15,062.34
D)$1,127.10; $17,388.09
E)-$604.17; $15,062.34

Question

Quizplus · Accepted Answer

NPV_19.5% = -$125,000 + $33,300 / 1.193 + $78,700 / 1.193² + $69,500 / 1.193³ = -$859.11 NPV_12% = -$125,000 + $33,300 / 1.127 + $78,700 / 1.127² + $69,500 / 1.127³ = $15,062.34

A New Project Has an Initial Cost of $125,000 and Cash