Kampgrounds Inc

question 81

Multiple Choice

Kampgrounds Inc.is considering purchasing a parcel of wilderness land near a popular historic site.Although this land will cost Kampgrounds $400,000 today,by renting out wilderness campsites on this land,Kampgrounds expects to make $35,000 at the end of every year indefinitely.If the appropriate discount rate is 8%,then the NPV of this new wilderness campsite is closest to:

• A)-$50,000.
• B)-$37,500.
• C)$37,500.
• D)$50,000.

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Definitions:

Student T Distribution

A probability distribution used in statistical inference for datasets with small sample sizes and unknown population standard deviations.

Variance

A measure of the dispersion of a set of data points around their mean; the average of the squared differences from the Mean.

Degrees of Freedom

The number of independent values or quantities that can freely vary in the analysis of statistical calculations without violating any constraints.

Exponential Distribution

A continuous probability distribution used to model the time between events in a process with a constant rate.