The Manufacture of Folic Acid Is a Competitive Business

Multiple Choice

The manufacture of folic acid is a competitive business. A new plant costs $100,000 and lasts for three years. The cash flow from the plant is as follows: year 1: +$43,300; year 2: +$43,300; and year 3: +$58,300. (Assume no taxes.) If the discount rate is 20 percent, what is the value of the plant at the end of year 1?

A) +$76,569
B) -$23,400
C) $48,600
D) None of the options are correct.