What Is the Net Present Value of a Project That

question 159

Multiple Choice

What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5 %.

• A) $218.68
• B) $370.16
• C) $768.20
• D) $1,249.65
• E) $1,371.02

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Definitions:

Economic Value

The value of an asset, product, or service determined through its ability to generate income or benefits for its owner.

Stock Dividend

A distribution of extra shares as a dividend, rather than distributing cash.

Stockholder Wealth

The total value of a shareholder's investment in a company, typically measured by the market value of shares held.

Flotation Costs

Expenses incurred by a company when it issues new securities, including underwriting fees and legal expenses.