The NPV of a project with an initial investment of $1,000 that provides after-tax operating cash flows of $300 per year for four years where the firm's cost of capital is 15 percent is $856.49.

Question

Quizplus · Accepted Answer

The NPV (Net Present Value) of a project is calculated by discounting the future cash flows back to their present value and then subtracting the initial investment. Using the given information and a discount rate of 15%, the NPV calculation does not result in $856.49.

The NPV of a Project with an Initial Investment of $1,000