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Reed Enterprises is considering a project that has the following cash flow and cost of capital (r) data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.r: 10.00%Year 0 1 2 3Cash flows −$1,050 $450 $460 $470a. $92.37b. $96.99c. $101.84d. $106.93e. $112.28

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Answer:

The correct answer is A.

Explanation:

Giving the following information:

The following cash flow: Year 0 1 2 3Cash flows −$1,050 $450 $460 $470.

The cost of capital is 10%.

We need to use the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Cf= cash flow

For example Year 2= 460/1.10^2= 380.16

NPV= 92.37

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