Corporate Finance Q47

0. A project investment of $100 generates after-tax cash flows of $50 in Year 1, $60 in Year 2, $120 in Year 3 and $150 in Year 4. The required rate of return is 15 percent. The net present value is closest to:

Answer
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Option : A
Explanation : NPV = -100 + 50/1.15 + 60/(1.15)^2 + 120/(1.15)^3 + 150/(1.15)^4 = 153.51.
Using a financial calculator, enter the cash flows.
CF0 = - 100, CF1 = 50, CF2 = -60, CF3 = 120, CF4 = 150, I = 15, CPT NPV.
NPV = 153.51.

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