Answer:
D. $5,208.11
Explanation:
Projected cash flow for each year for 3 years = $22,500
Initial cost = $50,000
Additional working capital required = $3,000
Year Cash flow PVIF @ 10% Discounted Value Total
0 - $50,000 $1 - $50,000 -$50,000
0 - $3,000 $1 - $3,000 -$3,000
1 $22,500 0.909 $20,452.5 $20,452.5
2 $22,500 0.826 $18,525 $18,525
3 $22,500 0.751 $16,897.5 $16,897.5
3 $3,000 0.751 $2,253 $2,253
Total $5,128.00
The nearest value is $5,208 and the difference is due to rounding off.
Correct option is
D. $5,208.11
