APFIVE Net Present Value of a Forestry Project
A sustainable forestry project is designed to yield a net profit of $10 million per year over 5 years. The net present value (NPV) of these cash flows is given by $$NPV = \sum_{t=0}^{4} \frac{10\,\text{million}}{(1+0.05)^t}$$ using a discount rate of 5%. What is the approximate NPV of the project?
A
Approximately $40 million.
B
Approximately $55 million.
C
Approximately $50 million.
D
Approximately $45.5 million.
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