Use the following cash flows to answer Year 0 1550 Year 1

Use the following cash flows to answer:

Year 0 = ($1,550); Year 1 = $850; Year 2 = $900. The firms WACC = 8%.

What is the NPV?

a) $200

b) $8.64

c) $70

d) $150

Thank You

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=850/1.08+900/1.08^2

=(850*0.925925925)+(900*0.85733882)

=$1558.64

NPV=Present value of inflows-Present value of outflows

=$1558.64-$1550

=$8.64(Approx).