Net Present Value Is Being Used to Break the Tie

question 31

Multiple Choice

Net present value is being used to break the tie among four otherwise equal projects.If the interest rate is 4%,which of these anticipated four-year flows would yield the greatest net present value?

• A)$10,000 in year 1;$11,000 in year 2;$12,000 in year 3;and $13,000 in year 4
• B)$13,000 in year 1;$12,000 in year 2;$11,000 in year 3;and $10,000 in year 4
• C)$10,000 in year 1;$10,000 in year 2;$13,000 in year 3;and $13,000 in year 4
• D)$11,000 in year 1;$11,000 in year 2;$12,000 in year 3;and $12,000 in year 4

---

Definitions:

Overhead Rate

The ratio used to allocate indirect costs to products or services, based on a specific measure such as labor hours or machine hours.

Direct Hours

Hours worked directly on a specific task or product, often used in calculating labor costs in manufacturing.

Direct Materials

Raw materials that can be directly attributed to the production of a specific product or service.

Selling Price

The amount of money a customer pays to purchase a product or service.