The Horizon Company will invest $60,000 in a temporary project that will generat

Question

The Horizon Company will invest $60,000 in a temporary project that will generate the following cash inflows for the next three years.

Year

Cash Flow

1................

$15,000

2................

25,000

3................

40,000

The firm will also be required to spend $10,000 to close down the project at the end of the three years. If the cost of capital is 6 percent, what is the net present value of this project?

a) approx. 900

b) 69,995

c) (8,400)

d) 1,595

Year

Cash Flow

1................

$15,000

2................

25,000

3................

40,000

Explanation / Answer

Ans (c)

Year Cash Flow 0 -60000 1................ 15000 2................ 25,000 3................ 30,000 NPV -$8,179.93

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.