Consider a project that has an initial outlay of $1,200. The firm's cost of capital is 10%. The expected cash flows are: Year 1 = $550 Year 2 = $560 Year 3 $790 What is the net present value for the project? OA. $200.15 OB. $480.00 OC. $356.35 O D. $191.06

Consider a project that has an initial outlay of $1,200. The firm's cost of capital is 10%. The expected cash flows are: Year 1 = $550 Year 2 = $560 Year 3 $790 What is the net present value for the project? OA. $200.15 OB. $480.00 OC. $356.35 O D. $191.06

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

Question

Consider a project that has an initial outlay of $1,200. The firm's cost of capital is 10%. The expected cash flows are:
Year 1 = $550
Year 2= $560
Year 3 = $790
What is the net present value for the project?
OA. $200.15
OB. $480.00
OC. $356.35
O D. $191.06

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