Compute the NPV statistic for Project U given the following cash flows and if the appropriate cost of capital is 9 percent.Project U $$\begin{array} { | r | l | l | l | l | l | l | }
\hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\hline \text { Cash Flow } & - \$ 1,000 & \$ 350 & \$ 1,480 & - \$ 520 & \$ 400 & - \$ 100 \
\hline
\end{array}$$
A)$201.69
B)$273.82
C)$383.63
D)$397.21

Question

Compute the NPV statistic for Project U given the following cash flows and if the appropriate cost of capital is 9 percent.Project U $$\begin{array} { | r | l | l | l | l | l | l | } 
\hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \
\hline \text { Cash Flow } & - \$ 1,000 & \$ 350 & \$ 1,480 & - \$ 520 & \$ 400 & - \$ 100 \
\hline
\end{array}$$
A)$201.69
B)$273.82
C)$383.63
D)$397.21

Quizplus · Accepted Answer

Using the formula for NPV:
NPV = -1000 + 350/(1+0.09)^1 + 1480/(1+0.09)^2 - 520/(1+0.09)^3 + 400/(1+0.09)^4 - 100/(1+0.09)^5

Solving for NPV, we get $383.63, which is closest to option C. Therefore, the best choice is C.

Compute the NPV Statistic for Project U Given the Following