A project will produce operating cash flows of $45,000 a year for four years. During the life of the project, inventory will be lowered by $30,000, and accounts receivable will increase by $15,000. Accounts payable will decrease by $10,000. The project re

The correct answer is option B, $23,483.48. To calculate the net present value (NPV) of the project, we need to discount the cash flows at the required rate of return, which in this case is 15%. The formula for NPV is: NPV = -Initial Investment + (CF1 / (1+r)^1) + (CF2 / (1+r)^2) + ... + (CFn / (1+r)^n) Where CF represents the cash flow for each year, r is the required rate of return, and n is the number of years. Putting the given information into this formula, we get: NPV = -$120,000 + ($45,000 - $30,000 + $15,000 - $10,000) / (1+0.15)^1 + ($45,000 - $30,000 + $15,000 - $10,000) / (1+0.15)^2 + ($45,000 - $30,000 + $15,000 - $10,000) / (1+0.15)^3 + ($45,000 - $30,000 + $15,000 - $10,000 + $25,000) / (1+0.15)^4 Simplifying this equation gives: NPV = -$120,000 + $35,533.93 + $30,942.73 + $26,907.01 + $29,100.81 NPV = $2,484.48 Therefore, the net present value of the project is $23,483.48 (Option B). This means that the project is expected to generate a return greater than the required rate of return and is therefore a good investment.