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:

Check Fee Expense

Charges incurred by a business or individual for issuing or cashing checks, often recognized as an expense.

Bank Service Charges

Fees charged by banks for account maintenance, transactions, or other financial services.

Note Collected

The receipt of cash from the repayment of a promissory note where the borrower repays the lender.

Deposits In Transit

Deposits that have been made to a bank account but not yet credited by the bank, leading to discrepancies in bank reconciliation.