A Firm Estimates That It Will Receive Cash Flows from a New

Multiple Choice

A firm estimates that it will receive cash flows from a new product of $150,000 in Year 1, $220,000 in Year 2, and $150,000 in Year 3. If a discount rate of 7% is assumed, what is the NPV of this product's cash flows?

A) $454,788
B) $556,400
C) $520,000
D) NPV cannot be determined from the information given