An Investment of $1

Multiple Choice

An investment of $1.5 million is expected to generate cash flows of $625 000 p.a. ,at constant prices,over the next three years.The required rate of return,assuming zero inflation,is 17% p.a.If prices are expected to increase at the rate of 10% p.a. ,the project's net present value is:

A) ($119 009)
B) $159 456
C) ($343 856)
D) $19 090