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What is the NPV of continuing with this project?

A project has been evaluated on the basis that it will cost $14 million and will have a net present value of $2.3 million.

The project has commenced and $3 million of the initial $14 million has been invested. A problem has been discovered that will cost an additional $2.5 million to rectify. The $2.5 million will be payable immediately.

What is the NPV of continuing with this project?
A . -$3 million
B . -$0.2 million
C . $1.8 million
D . $2.8 million

Answer: D

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