XYZ is considering a new project that will involve a large initial investment an
ID: 2623989 • Letter: X
Question
XYZ is considering a new project that will involve a large initial investment and then result in a series of positive cash flows for six years. The estimated cash flows are as follows:
Initial Investment $1750 million
Cash Flow in Year 1 $250 million
Cash Flow in Year 2 $275 million
Cash Flow in Year 3 $300 million
Cash Flow in Year 4 ?
Cash Flow in Year 5 $325 million
Cash Flow in Year 6 $350 million
What will be the approximate expected cash flow in year 4, if the project has a net present value of $100 million at 6% discount rate?
Answer
$714 million
$793 million
$637 million
$873 million
$714 million
$793 million
$637 million
$873 million
Explanation / Answer
$793 million
$793 million
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