The NPV of a project with an initial investment of $2,500 that provides after-tax operating cash flows of $500 per year for four years where the firm's cost of capital is 15 percent is $427.49.

Question

Quizplus · Accepted Answer

The NPV (Net Present Value) calculation involves discounting future cash flows back to their present value using the cost of capital and then subtracting the initial investment. Given the data, the correct NPV calculation would not precisely result in $427.49 due to the specifics of the cash flows and the discount rate provided.

The NPV of a Project with an Initial Investment of $2,500