ABC Company in Considering a Loss Control Investment

question 15

Multiple Choice

ABC Company in considering a loss control investment.The project will cost $100,000.It will generate an after-tax net cash flow of $60,000 one year after investment and an after-tax net cash flow of $60,000 two years after investment.The present value of $1 received one year from today assuming a 6 percent rate is .9434.The present value of $1 received two years from today assuming a 6 percent interest rate is .8900.Assuming a discount rate of 6 percent,what is the net present value (NPV) of this project?

• A)$10,004
• B)$13,195
• C)$16,604
• D)$20,000

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Definitions:

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