Garner-Wagner Incorporated
The executives of Garner-Wagner Inc.are considering a project that has an up-front cost of $3 million and is expected to produce a cash flow of $500,000 at the end of each of the next 5 years.The project's cost of capital is 10%.
-Refer to the data for Garner-Wagner Incorporated.Based on the above data, what is the project's net present value?
A) −$1,312,456
B) −$1,104,607
C) −$875,203
D) $105,999
E) $321,788

Question

Quizplus · Accepted Answer

The NPV is calculated by discounting the cash flows at the cost of capital and subtracting the initial investment. The NPV is negative, indicating the project is not financially viable.

Garner-Wagner Incorporated The Executives of Garner-Wagner Inc.are Considering a Project That Has