Question

Pipette Medical Services is considering an investment of $200,000. Assume the discount rate is 18%. Data related to the cash inflows are as follows: Year Cash Inflows 1 $100,000 2 92,000 3 120,000 4 160,000 5 100,000 Using a spreadsheet or financial calculator, determine the net present value for the investment. The investment's net present value is: Select one: A. $ 62,920 B. $114,237 C. $ 75,046 D. $150,092

Answer 1

$150,092

Step-by-step explanation:

Net present value is derived by subtracting the cost of a project from the after tax cash flows.

Using a financial calculator to find the NPV

cash flow for year zero = -$200,000

Cash flow for year one = $100,000

Cash flow for year two = $92,000

Cash flow for year three =$ 120,000

Cash flow for year four =$ 160,000

Cash flow for year five =$ 100,00

Discount rate = 18%

NPV = $150,092

I hope my answer helps you.