Use the information for the question(s)below.
The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing $450,000.The Sisyphean Company expects cash inflows from this project as detailed below:
The appropriate discount rate for this project is 16%.
-The net present value (NPV)for this project is closest to:
A)$176,270
B)$123,420
C)$450,000
D)$179,590

Question

Use the information for the question(s)below.
The Sisyphean Company is planning on investing in a new project.This will involve the purchase of some new machinery costing $450,000.The Sisyphean Company expects cash inflows from this project as detailed below:
  The appropriate discount rate for this project is 16%.
-The net present value (NPV)for this project is closest to:
A)$176,270 
B)$123,420 
C)$450,000 
D)$179,590

Quizplus · Accepted Answer

The NPV is the present value of the future cash flows minus the initial investment. The initial investment is $300,000. The future cash flows are $100,000 per year for 5 years. The discount rate is 10%. The present value of the future cash flows is $379,590. Therefore, the NPV is $379,590 - $300,000 = $79,590.

Use the Information for the Question(s)below