Quantitative Methods Q52

0. A company is planning to invest $25,000 in a new project. The project is expected to generate annual after-tax cash flows of $5000 for the next 3 years and $15,000 in its fourth year. Given that the appropriate discount rate for this project is 5.5 percent, the NPV of the project is closest to:

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Option : A
Explanation : Enter the given cash flows and discount rate in a financial calculator to calculate NPV: C0= -25,000, CF1= 5000, CF2= 5000, CF3= 5,000, CF4= 15000, i = 5.5%, CPT NPV. NPV = $597.92.

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