Use the table for the question(s)below.
Consider a project with the following cash flows:

-Given the cash flows in the table above, the point at which the NPV profile crosses the vertical axis is
A)-$612.
B)22.0%.
C)14.0%.
D)$5 500.

Question

Use the table for the question(s)below.
Consider a project with the following cash flows:
 
-Given the cash flows in the table above, the point at which the NPV profile crosses the vertical axis is
A)-$612. 
B)22.0%. 
C)14.0%. 
D)$5 500.

Quizplus · Accepted Answer

The NPV profile crosses the vertical axis at the point where the discount rate is 0%. At a 0% discount rate, the NPV is simply the sum of the cash flows, which, based on the information provided, would be $5,500. This is because, at a 0% discount rate, there is no discounting effect on the cash flows, so the NPV equals the sum of all future cash flows.

Use the Table for the Question(s)below