Gao Enterprises Plans to Build a New Plant at a Cost

question 25

Multiple Choice

Gao Enterprises plans to build a new plant at a cost of $3,250,000. The plant is expected to generate annual cash flows of $1,225,000 for the next five years. If the firm's required rate of return is 18 percent, what is the NPV of this project? (Do not round intermediate computations. Round final answer to nearest dollar.)

• A) $2,875,000
• B) $3,830,785
• C) $580,785
• D) $2, 225,875

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