MENU
Company TTM has the opportunity to invest $60,000 in a project. The project is anticipated to produce annual returns of $12,500 each year for 8 years. The cost of capital is 12%.
What is the net present value of the project? Give your answer to the nearest whole number.
Suggested Answer: A
Get Premium CIMAPRO19-P02-1 Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
20 comments · newest first
CH
Charlesetta
1 month ago
Definitely worth the investment!
AL
Albert
1 month ago
12% cost of capital is reasonable.
TY
Ty
2 months ago
The returns seem solid over 8 years.
EL
Elbert
2 months ago
I feel confident about the $2,100 answer.
LA
Lasandra
2 months ago
Yeah, I calculated it too.
JA
Jacinta
2 months ago
I think the NPV will be positive.
BO
Bok
2 months ago
12% cost of capital seems high for this project.
CH
Chana
2 months ago
That's a solid return for 8 years!
ST
Stephen
3 months ago
Wait, are we sure about those numbers?
KE
Keshia
3 months ago
Sounds about right, I agree!
FR
Frederick
3 months ago
NPV calculation shows it's around $2,100.
CE
Celestina
3 months ago
Just did the math, and it checks out!
RA
Raul
3 months ago
Totally agree, looks like a good investment!
KE
Keva
4 months ago
Wait, how can it be positive with a 12% cost of capital?
LE
Leana
5 months ago
I think it's around $2100, right?
GA
Gail
5 months ago
NPV calculation is key here!
UL
Ula
6 months ago
I’m a bit confused about the cost of capital. Does that mean we just use 12% for the discount rate? I feel like I’ve seen this in practice questions before.
CO
Corazon
6 months ago
If I recall, we should subtract the initial investment from the total present value of the cash flows. I hope I remember the discounting part right!
TA
Tanesha
6 months ago
I remember doing a similar question where we had to discount cash flows. I think we use the formula for NPV, but I might mix up the steps.
RY
Ryan
6 months ago
I think we need to calculate the present value of the cash flows first, but I'm not entirely sure how to apply the formula correctly.