A Project You Are Considering Is Expected to Provide Benefits

question 14

Multiple Choice

A project you are considering is expected to provide benefits worth $225,000 in one year.If the risk-free rate of interest (rf) is 8%,then the value of the benefits of this project today are closest to:

• A)$190,333.
• B)$208,333.
• C)$225,000.
• D)$243,000.

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Definitions:

Average-Variable-Cost Curve

A graphical representation showing how the average variable cost of production changes as the quantity of output is altered.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total quantity of produced output.

Average Total Cost

The aggregate expense of manufacturing (comprising both fixed and variable expenditures) divided by the overall amount produced.

Marginal Cost

The incremental cost of producing an extra unit of a good or service.