Which of the Following Is a Correct Equation to Solve

question 3

Multiple Choice

Which of the following is a correct equation to solve for the NPV of the project that has an initial outlay of $30,000,followed by incremental cash inflows in the next 3 years of $15,000,$20,000,and $30,000? Assume a discount rate of 10%.

• A)NPV = - $30,000 + $15,000(1.10)¹ + $20,000(1.10)² + $30,000(1.10)³
• B)NPV = - $30,000 + $15,000/(1.10)¹ + $20,000/(1.10)² + $30,000/(1.10)³
• C)NPV = - $30,000 + $15,000/(1.01)^.10 + $20,000/(1.02)^.10 + $30,000/(1.03)^.10
• D)NPV = - $30,000 + $15,000/(1.1)^.10 + $20,000(1.2)^.10 + $30,000(1.3)^.10

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