The NewProduct Project Involves an Initial Investment of £400,000

question 23

Multiple Choice

The NewProduct project involves an initial investment of £400,000. The predicted annual cash flow is £150,000 for a four year period, after which the product will be replaced. The required rate of return is 15 per cent. What is the net present value?

• A) - £25,750
• B) £200,000
• C) £35,750
• D) £28,250

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Definitions:

Vigilant Investors

Active and informed investors who closely monitor their investments and market conditions to protect and grow their portfolio.

Efficient Operation

A mode of functioning in which a system uses the smallest amount of input resources to achieve the highest amount of output.

Net Return

The total earnings from an investment after subtracting all costs and expenses, indicating the actual financial gain.

Microsoft Stock

Equity shares of Microsoft Corporation, representing ownership interest and potential financial returns to investors in this multinational technology company.