Project M Requires an Initial Investment of $25 Million

question 83

Multiple Choice

Project M requires an initial investment of $25 million. The project is expected to generate $2.25 million in after-tax cash flow each year forever. If the weighted average cost of capital (WACC) is 9 percent, calculate the NPV of the project.

• A)−2.5 million
• B)+2.5 million
• C)Zero
• D)+2.1 million

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Definitions:

Homo Erectus

An extinct species of human that lived between 1.9 million and 143,000 years ago, known for their upright walking ability.

Morphological Traits

Physical characteristics of organisms, such as shape, size, and structure, that can differ significantly within and between species.

Chordates

A large group of animals that includes all vertebrates as well as two groups of invertebrates, characterized by having a notochord at some stage of development.

Common Ancestor

The most recent individual from which all organisms in a group are directly descended.