f a project requires an initial current investment of £200 and promises to raise £133.1 after three years, what is this project's Net Present Value (NPV) if your discount rate is 10% per year? a) - £66.9 b) - £100 c) Zero d) £66.9

f a project requires an initial current investment of £200 and promises to raise £133.1 after three years, what is this project's Net Present Value (NPV) if your discount rate is 10% per year? a) - £66.9 b) - £100 c) Zero d) £66.9

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 23E: Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

If a project requires an initial current investment of £200 and promises to raise £133.1 after three years, what is this project's Net Present Value (NPV) if your discount rate is 10% per year?

a) - £66.9

b) - £100

c) Zero

d) £66.9

Definition Definition Calculation used to evaluate the investment and financing decisions that involve cash flows occurring over multiple periods. NPV is calculated as the difference between the present value of cash inflow and cash outflow. NPV is used for capital budgeting and investment planning as well as to compare similar investment alternatives.

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