Parks Corporation Is Considering an Investment Proposal in Which a Working

question 165

Multiple Choice

Parks Corporation is considering an investment proposal in which a working capital investment of $10,000 would be required. The investment would provide cash inflows of $2,000 per year for six years. The working capital would be released for use elsewhere when the project is completed. If the company's discount rate is 10%, the investment's net present value is closest to (Ignore income taxes.) : Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

• A) $1,290
• B) $(1,290)
• C) $2,000
• D) $4,350

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Definitions:

Balance Sheet

The balance sheet offers a momentary view of a company's financial status at a certain time, detailing its assets, liabilities, and equity held by shareholders.

Selected Accounts

Selected accounts are specific accounts chosen for review or analysis, often for the purpose of financial reporting or audit.

Owner's Equity

The residual interest in the assets of the enterprise after deducting liabilities, essentially the net worth of the company attributable to the owners.

Liabilities

Financial obligations or debts that a company owes to others, such as loans, accounts payable, and mortgages.