A 6-Year Project Has a Zero NPV with Sales of $5

question 71

Multiple Choice

A 6-year project has a zero NPV with sales of $5 million and a discount rate of 8%.The annual cash inflows are equal to 10% of sales minus $300,000.What was the initial investment in the project assuming that none of the investment is recoverable when the project ends?

• A) $416,667
• B) $924,576
• C) $1,016,678
• D) $2,311,450

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