An investment of $115 generates after-tax cash flows of $50 in Year 1, $90 in Year 2, and $150 in Year 3. The required rate of return is 20 percent. The net present value is closest to $92.32. $75.97. $37.27. $92.35.

The correct answer is B.

Explanation:

Giving the following information:

An investment of $115 generates after-tax cash flows of $50 in Year 1, $90 in Year 2, and $150 in Year 3.

Rate of return = 20%

To calculate the present value, we need the following formula:

NPV = - Io + ∑[Cf / (1+i) ^n]

Cf = cash flow

Io = 115

Cf1 = 50 / 1.20 = $41.67

Cf2 = 90/1.2^2 = $62.5

Cf3 = 150/1.2^3 = $86.81

NPV = - 115 + (41.67 + 62.5 + 86.81)

NPV = $75.98