Would You Accept a Project Which Is Expected to Pay

question 235

Multiple Choice

Would you accept a project which is expected to pay $10,000 a year for seven years if the initial investment is $40,000 and your required return is 15%?

• A) Yes; the NPV is $1,604
• B) Yes; the NPV is $1,446
• C) Yes; the NPV is $4,238
• D) No; the NPV is -$1,369
• E) No; the NPV is -$2,783

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Definitions:

Capitalism

An economic system characterized by private ownership of the means of production and their operation for profit.

Socialism

A political and economic system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.