Calculate the NPV of a Project Requiring a $3,000 Investment

question 34

Multiple Choice

Calculate the NPV of a project requiring a $3,000 investment followed by an outflow of $500 in Year 1, and inflows of $1,000 in Year 2 and $4,000 in Year 3. The cost of capital is 12%. (Round to nearest $)

• A)$52
• B)$198
• C)$257
• D)$486

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Definitions:

Flooding

An exposure therapy technique used in psychology to treat phobias and anxiety disorders, or the occurrence of excessive water covering land that is usually dry.

Sterile Dressing

A germ-free covering applied to a wound to protect it from infection and promote healing.

Water

a colorless, tasteless, and odorless liquid essential to life, forming the world's lakes, rivers, seas, and rain, and a major component of the fluids of organisms.

Edema

A condition of body tissues containing abnormal amounts of fluid, usually intercellular; may be local or general.