Lincoln Coal is planning a new coal mine, which will cost $ 430000 to build, with the expenditure occurring next year. The mine will bring cash inflows of $ 200000 annually over next seven years. It will then cost $170000 to close down the mine over the following year. Assume all cash flows occur at the end of the year. Alternatively, Lincoln Coal may choose to sell the site today. What minimum price should Lincoln set on the property, given a 16% required rate of return
A．
| A. $ 325859. |
B．
| B. $ 376872. |
C．
| C. $ 280913. |
参考答案：C
解析：
The key to this problem is identifying this as a NPV problem even though the first cash flow will not occur until the following year. Next, the year of each cash flow must be property identified; specifically: CF0=$0; CF1=-430000; CF2-8=+$200000; CF9=-$170000. One simply has to discount all of the cash flows to today at a 16% rate. NPV=$280913.