Use the Information for the Question(s)below

question 19

Multiple Choice

Use the information for the question(s) below.
Boulderado has come up with a new composite snowboard.Development will take Boulderado four years and cost $250,000 per year,with the first of the four equal investments payable today upon acceptance of the project.Once in production the snowboard is expected to produce annual cash flows of $200,000 each year for 10 years.Boulderado's discount rate is 10%.
-The NPV for Boulderado's snowboard project is closest to:

• A)$228,900.
• B)$46,900.
• C)$51,600.
• D)$23,800.

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Definitions:

Present Value

The immediate worth of a future lump sum or successive cash inflows, considering a specific return rate.

Future Sum

The projected amount of money or value at a specific future date, usually factoring in variables such as interest rates and time periods.

Loan

A sum of money borrowed by one party from another, subject to repayment of the principal amount with interest.

Amortized

The process of gradually writing off the initial cost of an asset over a period.