Your organization is considering running a project which will require an investm

Question

Your organization is considering running a project which will require an investment of $1,000.000. The product of the project is foretasted to create revenues of $250,000.00 in the first year after closing of the project and $420,000.00 in each of the following years. What is the true net present value of the project over the three years' cycle at a discount rate of 10%

A- The net present value is positive which makes the project attractive

B- the net present value is positive which makes the project unattractive

C -the net present value is negative which makes the project attractive

D- The net present value is negative which makes the project unattractive

Explanation / Answer

NPV = $250000(PVIF10%,1) + $420000(PVIF10%,2) + $420000(PVIF10%,3)- $1,000000= -$110,067.62

Hence

D- The net present value is negative which makes the project unattractive

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