Following Details Are Provided by VPN Company Refer to the Following Table for PV Factors

question 101

Multiple Choice

Following details are provided by VPN Company. $$\begin{array} { | c | r | } \hline \text { Initial investment } & \$ 5,000,000 \\\hline \text { Discount rate } & 15 \% \\\hline \text { Yearly cash flows } & \\\hline 1 & \$ 1,250,000 \\\hline 2 & \$ 1,350,000 \\\hline 3 & \$ 2,400,000 \\\hline 4 & \$ 1,150,000 \\\hline\end{array}$$ Refer to the following table for PV factors:
$$\begin{array} { | r | r | r | r | } \hline & 13 \% & 14 \% & 15 \% \\\hline 1 & 0.885 & 0.877 & 0.87 \\\hline 2 & 0.783 & 0.769 & 0.756 \\\hline 3 & 0.693 & 0.675 & 0.658 \\\hline 4 & 0.613 & 0.592 & 0.572 \\\hline\end{array}$$ What is the NPV of the project?

• A) $654,900 negative
• B) $590,000 positive
• C) $615,455 positive
• D) $590,850 negative

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