Calculate the Net Present Value for a project with the following cash flows: Year 0: ($5,000) Year 1: $10,000 Year 2: $10,000 Year3: ($2,000). The discount rate is 5%. Group of answer choices $19,209.75 $12,350.00 $18,840.25 $23,840.25 $14,209.75

The net present value of the project means the present value of all future cash flows, in years 1-3, discounted at the appropriate project's discount rate of 5% minus the initial investment outlay of $5000.

Note that all negative cash flows would be shown as negative in the computation of the net present value.

The present value of a single future cash flow can be determined using the present value formula of a single cash flow provided below:

PV=FV/(1+r)^N

FV=future cash flow

r=discount rate=

n=the year of cash flow, 1 for year 1 cash flow, 2 for year 2 cash flow, and so on.

NPV=$10000/(1+5%)^1+$10,000/(1+5%)^2-$2000/(1+5%)^3-$5000

Note year zero cash flow needs not to be discounted since it is stated in its today's worth, the present value equivalence

NPV=$11,866.43

Note the closest option, in this case, is the one that is very close to the correct answer, which is $14,209.75, some questions are set with the requirement that one chooses an approximate answer, where the precise answer is not available