Question

At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10%:A. $606B. $8,271C. $(1,729)D. $1,729

Answer 1

Full Question

The following data pertain to an investment in equipment:Investment in the project ..........$10,000 Net annual cash inflows ............2,400  Working capital required ...........5,000 Salvage value of the equipment .....1,000 Life of the project ................8 years At the completion of the project, the working capital will be released for use elsewhere. Compute the net present value of the project, using a discount rate of 10%:a. $606.b. $8,271.c. ($1,729).d. $1,729.

Answer: c : -$1,729

Explanation:

Formula : NPV = summation of (cash flow divided by the power of one plus discount factor)