Consider a project with the following cash flows: If the appropriate discount rate for this project is 13%, then the net present value (NPV)is closest to ________.
A)$24,000
B)-$1846
C)-$3077
D)-$2154

Question

Consider a project with the following cash flows:  If the appropriate discount rate for this project is 13%, then the net present value (NPV)is closest to ________.
A)$24,000 
B)-$1846 
C)-$3077 
D)-$2154

Quizplus · Accepted Answer

Using the NPV formula: 
NPV = -Initial Investment + CF1/(1+r)^1 + CF2/(1+r)^2 + ... + CFn/(1+r)^n

NPV = -30,000 + 10,000/(1+0.13)^1 + 12,000/(1+0.13)^2 + 15,000/(1+0.13)^3 + 20,000/(1+0.13)^4

NPV = -$3,077.13

Therefore, the closest NPV to the given cash flows and discount rate is -$3077, and the best choice is C.

Consider a Project with the Following Cash Flows: If