A New Grocery Store Requires $50 Million in Initial Investment

Multiple Choice

A new grocery store requires $50 million in initial investment. You estimate that the store will generate $5 million of after-tax cash flow each year for five years. At the end of five years, it can be sold for $60 million (ignore taxes) . What is the NPV of the project at a discount rate of 10 percent?

A) $2.42 million
B) $10.82 million
C) $6.21 million
D) $2.82 million