Question
A project costs $100,000 today to get started and will produce cash flows of $0, $10,000, $20,000 in years 1, 2, 3. After year 3
A project costs $100,000 today to get started and will produce cash flows of $0, $10,000, $20,000 in years 1, 2, 3. After year 3 the cash flows will increase by 3% (i.e. the year-4 cash flow is $20,600) forever. With a discount rate of 8%, what is the net present value (NPV) of the project?
Options:
- $251,509
- $351,509
- $292,936
- $342,936
- $242,936
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Business Mathematics
Authors: Gary Clendenen, Stanley A Salzman, Charles D Miller
12th Edition
0135109787, 9780135109786
