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A business is contemplating investing in a new project with a lifespan of three years and a capital cost of $100,000. The expected net cash flows from the project are as follows:
Year 1 $35,000
Year 2 $50,000
Year 3 $40,000
The cost of capital to the business is 10%
The net present value of the project is: $
Suggested Answer: B
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39 comments · newest first
HO
Hollis
11 months ago
I’m leaning towards option B for the NPV.
PA
Pamella
11 months ago
10% cost of capital is pretty standard, right?
IS
Isreal
11 months ago
Wait, are we sure about those cash flow estimates?
DA
Daniela
12 months ago
I think the NPV will be positive, definitely worth it.
NI
Nieves
12 months ago
The cash flows look solid for a 3-year project!
KR
Kris
1 year ago
I think the answer might be around 3155, but I’m not completely confident. I wish I had reviewed the NPV calculations more thoroughly.
TY
Tyisha
1 year ago
I’m a bit confused about how to apply the cost of capital here. Did we use it directly in the calculations or was it just for comparison?
JE
Jennifer
1 year ago
This question seems similar to one we practiced last week. I think the cash flows need to be discounted at 10% to find the NPV.
CA
Candida
1 year ago
I remember we calculated NPV in class, but I’m not sure if I got the formula right for this one.
ER
Eric
1 year ago
This seems pretty straightforward. I'll just plug the numbers into the NPV formula and see what I get. As long as I don't make any silly mistakes in the calculations, I should be able to arrive at the correct answer.
AS
Asha
1 year ago
Okay, I've got this. First, I'll calculate the present value of each cash flow using the discount rate of 10%. Then I'll add up the present values and subtract the initial investment to get the NPV. Should be straightforward if I work through it step-by-step.
CE
Celestina
1 year ago
Hmm, I'm a bit unsure about how to approach this. I know NPV has something to do with the time value of money, but I'm not confident in my ability to do the calculations correctly. Maybe I should review my notes on this topic before attempting the problem.
KI
Kindra
1 year ago
This looks like a standard net present value (NPV) calculation problem. I'll need to discount the future cash flows back to the present using the given 10% cost of capital.
MA
Malcom
1 year ago
I'm pretty confident I know the answer to this. If the team member hierarchy type is changed, the existing targets would turn to draft status, so option C is the correct answer.
KA
Karol
1 year ago
The T Server and Media Server don't seem to be the right answers here. I'm leaning towards the SIP Server and Network SIP Server, but I'll review my notes to make sure I'm not missing anything.
MI
Mila
1 year ago
I remember we practiced questions about DUR, and I believe that prospective ones deal with current and future treatments, not past data.
MA
Martina
1 year ago
Training seems like a logical final step to me, since you'd want to make sure everyone knows how to execute the contingency plan properly.
LE
Leontine
2 years ago
NPV? More like NPC (Net Present Confusion), am I right? Let's see if I can figure this out without a calculator the size of a small country.
SH
Sherrell
1 year ago
C) 3157
JO
Joni
1 year ago
B) 3158
MA
Margurite
1 year ago
A) 3155
LU
Lura
2 years ago
Wait, they're asking us to calculate the net present value of a project? I thought this was a baking exam!
AB
Abraham
1 year ago
D) 3153
TR
Truman
1 year ago
C) 3150
AN
Anglea
1 year ago
B) 3158
KR
Kristel
1 year ago
A) 3155
ES
Estrella
2 years ago
Oh boy, time to crunch some numbers. As long as I don't accidentally divide by zero, I think I'll be good to go.
HE
Henriette
2 years ago
NPV, huh? Time to put my financial wizardry to the test. I bet I can nail this in my sleep.
LO
Louann
1 year ago
B) 3158
TI
Tina
1 year ago
A) 3155
AD
Adelina
2 years ago
I'm not sure, but I think the cost of capital is a key factor in determining the net present value
AR
Ardella
2 years ago
Ah, the dreaded time value of money question. As long as I remember the formula, I should be able to get this right.
TH
Therese
2 years ago
I agree with Reta, the NPV calculation seems to match option A)
EU
Eugene
2 years ago
This seems like a straightforward NPV calculation. I'll need to be careful not to make any mistakes in the discounting and summation.
RO
Robt
1 year ago
D
LA
Lauryn
1 year ago
C
BE
Benton
1 year ago
B
RE
Ressie
1 year ago
A
RE
Reta
2 years ago
I think the answer is A) 3155