A Capacity Alternative Has an Initial Cost of $50,000 and Cash

Multiple Choice

A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5%, the net present value of this investment is

A) greater than $80,000.
B) greater than $130,000.
C) less than $30,000.
D) impossible to calculate, because no interest rate is given.
E) impossible to calculate, because variable costs are not known.