Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now. If the appropriate interest rate is 10%, then the NPV of this opportunity is closest to:

Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now. If the appropriate interest rate is 10%, then the NPV of this opportunity is closest to:

Naim 14:01

Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now.
If the appropriate interest rate is 10%, then the NPV of this opportunity is closest to:



A) ($88,000)
B) $88,000
C) $300,000
D) $1,300,000


Answer: B) NPV = -1,000,000 + 250,000/(1.10)^1+ 450,000/(1.10)^2+ 650,000/(1.10)^3= 87,528.17


Learn More :