Alpha Company Is Considering an Investment of $1,000,000 in a Land

Multiple Choice

Alpha Company is considering an investment of $1,000,000 in a land development project. It will yield cash flows of $300,000 for 5 years. Alpha uses a discount rate of 7%. What is the net present value of the investment?
$\begin{array}{|l|l|l|l|l|l|l|}\hline \text { Present}\\\text {Value of an}\\\text {Annuity of}\\ \$ 1 \\ \hline &5 \% & 6 \% & 7 \% & 8 \% & 9 \% & 10 \%\\ \hline 1& 0.95 & 0.943 & 0.93 & 0.926 & 0.917 & 0.909 \\\hline 2 & 1.859 & 1.833 & 1.809 & 1.783 & 1.759 & 1.736 \\\hline 3 & 2.729 & 2.673 & 2.624 & 2.577 & 2.531 & 2.487 \\\hline 4 & 3.546 & 3.465 & 3.387 & 3.312 & 3.240 & 3.170 \\\hline 5 & 4.329 & 4.212 & 4.10 d & 3.993 & 3.890 & 3.791 \\\hline\end{array}$

A) $230,000
B) $312,000
C) $330,000
D) $444,000