If the NPV of Project a Is + $120, That

question 48

Multiple Choice

If the NPV of project A is + $120, that of project B is -$40, and that of project C is + $40, what is the NPV of the combined project?

• A)+$100
• B)-$40
• C)+$70
• D)+$120

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Definitions:

Pre-tax Cost

The expense or cost associated with an investment or project before any taxes are deducted.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, indicating the percentage of tax applied to your next dollar of taxable income.

Coupons

The interest payments made to bondholders, typically on an annual or semi-annual basis.

Yield-to-maturity

The total return anticipated on a bond if it is held until the end of its lifetime, taking into account both interest payments and capital gains or losses.