A Capacity Alternative Has an Initial Cost of $30,000 and Cash

Multiple Choice

A capacity alternative has an initial cost of $30,000 and cash flow of $20,000 for each of the next four years. If the cost of capital (i.e., interest rate) is 5 percent, the net present value of this investment is:

A) greater than $80,000 but less than $110,000.
B) greater than $110,000.
C) less than $50,000.
D) greater than $50,000.
E) impossible to calculate, because variable costs are not known.