A project has a required return of 12.6 percent, an Initial cash outflow of $42.100, and cash Inflows of $16,500 In Year 1, $11,700 In Year 2, and $10,400 In Year 4. What is the net present value? Multiple Choice

a. -$11,748.69
b. -$10.933.52
c. -$11,208.62
d. -$10.457.09
e. -$12.006.13

a. -$11,748.69

Explanation:

Use following formula to calculate the Present values:

PV  = FV / (1+r)^n

r = 12.6%

1. PV = $16,500 x (1+12.6%)^-1 = $14,654

2 PV = $11,700 x (1+12.6%)^-2 = $9,228

3 PV = $10,400 x (1+12.6%)^-4 = $6,470

Year      Cash flow    Present Value

  0          ($42,100)      ($42,100)

  1           $16,500        $14,654

  2          $11,700         $9,228

  4          $10,400        $6,470    

NPV                             $11,748

Short term goals are anywhere from one week, to less then one year to complete. Long term goals are something that takes you a year or more to complete