1. **State the problem:** Calculate the Net Present Value (NPV) for Project A with an initial investment of 865000 and cash flows over 4 years, given a cost of capital of 13%. 2. **Formula for NPV:** $$\text{NPV} = \sum_{t=1}^n \frac{C_t}{(1+r)^t} - C_0$$ where $C_t$ is the cash flow at year $t$, $r$ is the discount rate (cost of capital), and $C_0$ is the initial investment. 3. **Given data:** - Initial investment $C_0 = 865000$ - Cash flows: $C_1=316000$, $C_2=350000$, $C_3=-20000$, $C_4=280000$ - Discount rate $r=0.13$ 4. **Calculate present value of each cash flow:** $$\frac{316000}{(1+0.13)^1} = \frac{316000}{1.13} \approx 279646.02$$ $$\frac{350000}{(1+0.13)^2} = \frac{350000}{1.2769} \approx 274010.94$$ $$\frac{-20000}{(1+0.13)^3} = \frac{-20000}{1.4429} \approx -13866.88$$ $$\frac{280000}{(1+0.13)^4} = \frac{280000}{1.6303} \approx 171712.85$$ 5. **Sum the present values:** $$279646.02 + 274010.94 - 13866.88 + 171712.85 = 711502.93$$ 6. **Calculate NPV:** $$\text{NPV} = 711502.93 - 865000 = -153497.07$$ 7. **Interpretation:** The NPV is approximately -153497, which is closest to option b: -153384.40. **Final answer:** b. -153384.40