A Project with an Initial Cost of $314,000 Will Generate

question 22

Multiple Choice

A project with an initial cost of $314,000 will generate no returns in the first two years of operations, and operating cash flows of $150,000 per year in Years 3, 4, and 5. The required rate of return is 7%. To which amount is the net present value of the project closest?

• A) $29,830
• B) $343,830
• C) $61,900
• D) $393,645