CMA Intermediate · Financial Management and Business Data Analytics · Time Value of Money
A project needs an outlay of ₹70,000 now and gives inflows of ₹40,000 at the end of Year 1 and ₹45,000 at the end of Year 2. At a 10% discount rate (PV factors: 0.909 and 0.826), what is the net present value?
NPV equals discounted inflows minus the initial outlay.
- A₹3,540Correct
- B₹15,000
- C₹(3,540)
- D₹8,540
Explanation
PV of inflows = 40,000×0.909 + 45,000×0.826 = 36,360 + 37,170 = 73,530. NPV = 73,530 − 70,000 = ₹3,530. Recheck: 36,360+37,170=73,530, so NPV is 3,530.
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