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:

Pick-Up Trucks

A type of motor vehicle characterized by an enclosed front cab and an open back for cargo transportation.

Response Variable

The outcome variable measured in an experiment or study to assess the effect of one or more explanatory variables.

Usable Lumber

Wood that has been processed and deemed suitable for construction or other practical uses, meeting specific quality standards.

Cubic Feet

A unit of volume measurement in the imperial system, equivalent to the volume of a cube with sides of one foot in length.