The net present value (NPV) that Energy Solutions Corporation would compute for Project A is a) $12155.48 (plus or minus $10).
The net present value is the difference between the present values of cash inflows and cash outflows.
The present value is the discounted future value of cash flows.
Discounting future cash flows brings them to their present-day value.
The present value can be computed using an online finance calculator as follows.
N (# of periods) = 2 years
I/Y (Interest per year) = 5.81%
PMT (Periodic Payment) = $0
FV (Future Value) = $100,600
Results:
PV = $89,855.48
Total Interest = $10,744.52
Initial investment cost = $77,700
Net present value (NPV) = $12,155.48 ($89,855.48 - $77,700)
Thus, since Energy Solutions' weighted-average cost of capital is 5.81%, its computed NPV is $12,155.48.
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