A project will not produce any cash flows for two years.Starting in the third year,it will produce annual cash flows of $11,900 a year for two years.The project initially costs $43,600.In Year 6,the project will be closed and as a result should produce a final cash inflow of $50,500.What is the net present value of this project if the required rate of return is 8.7 percent?
A)$5,474.76
B)$4,802.57
C)$3,935.56
D)$7,465.95
E)$5,447.76

Question

Quizplus · Accepted Answer

NPV -$43,600 + $11,900/1.087³ + $11,900/1.087⁴ + $25,500/1.087⁶ = $4,802.57

A Project Will Not Produce Any Cash Flows for Two