Use the Following Information to Answer the Question(s)below

question 57

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental is considering adding a trucking division to expand the coverage of its existing rail lines.The trucking division will cost $1,000,000 and is expected to generate free cash flows of $100,000 for each of the next five years.Taggart Transcontinental forecasts that future free cash flows after year 5 will grow at 2% per year,forever.Taggart Transcontinental's cost of capital is 10%.
-The NPV for the trucking division is closest to:

• A)$170,750.
• B)$200,000.
• C)$212,550.
• D)$250,000.
• E)$312,500.

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Definitions:

CSR Practices

Corporate Social Responsibility practices involve companies voluntarily exceeding legal requirements to benefit social and environmental causes.

Formal

Pertaining to official, structured, and often ceremonious procedures or arrangements within an organization.

Informal

Lacking official procedure or formal structure, often characterized by casual and relaxed interactions.

Visible Minority Group

An ethnic or racial group that is different from the majority population in appearance or culture, and is recognized as such in society.