Determine what is the net present value of the project

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Reference no: EM132552089

Kaboom Explosives Ltd is considering a major investment in a new mining project. According to initial estimates, the investment outlay would be $10,000,000 and the project would generate incremental pre-tax cash flow of $2,000,000 per year for fifteen years. The appropriate required rate of return is 16% p.a. and the project should be evaluated on a pre-tax basis.

Question 1: What is the net present value of this project (round to nearest $1,000)?

Option A. $10,000,000

Option B. $1,151,000

Option C. $10,664,000

Option D. $20,000,000

Reference no: EM132552089

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