What Is the Excel Formula to Compute the Net Present

question 1

Multiple Choice

What is the Excel formula to compute the net present value for an initial $53,000 investment and cash inflows of $17,000 per year for years 1 through 4 with a 10% cost of capital?

• A) =NPV(0.1,53000,−17000,−17000,−17000,−17000)
• B) =NPV(0.1, 17000,17000,17000,17000,−53000)
• C) =NPV(−53000,17000,17000,17000,17000)
• D) =NPV(0.1,−53000,17000,17000,17000,17000)

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.

Individual Retirement Account

A tax-advantaged investing tool that individuals use to earmark funds for retirement savings.

Rate of Return

The profit or deficit generated from an investment during a defined timeframe, represented as a percentage of the investment's initial value.

Insurance Settlement

An insurance settlement is the payment made by an insurance company to a claimant, policyholder, or a designated recipient as compensation for a covered loss or policy event.