A New Grocery Store Requires $50 Million in Initial Investment

question 60

Multiple Choice

A new grocery store requires $50 million in initial investment. You estimate that the store will generate $5 million of after-tax cash flow each year for five years. At the end of five years, it can be sold for $55 million (ignore taxes) . What is the NPV of the project at a discount rate of 10 percent?

• A)$2.4 million
• B)$5.0 million
• C)$3.1 million
• D)$0.0 million

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