At the end of the year the firm takes its 12 return and


Suppose a firm invests $100 in a new, one-year project. At the end of the year, the investment has earned a rate of return of 12% on that investment. At the end of the year, the firm takes its 12% return and sells the original investment for $100, so the total cash inflow at the end of Year 1 is $100 plus the cash return. If the firm has a 12% cost of capital, what is the NPV (the net present value) of this investment?

  • $0
  • $12
  • $112
  • $88
  • $100

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Basic Computer Science: At the end of the year the firm takes its 12 return and
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