MsCard Bought an Investment That Will Generate the Following Cash

question 33

Multiple Choice

Ms.Card bought an investment that will generate the following cash flows over a three-year period.Use Appendix A. If Ms.Card's marginal tax rate over the three-year period is 40% and she uses a 6% discount rate,compute the NPV of the transaction (round the final answer to the nearest whole dollar) .

• A)$94,129
• B)$84,964
• C)$62,373
• D)None of the above.

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Definitions:

Net Profit Margin

A financial metric showing the amount of each sales dollar left over after all expenses have been paid.

Cash Coverage Ratio

A financial metric used to evaluate a company's ability to pay its debt obligations using its cash and cash equivalents.

Current Liabilities

Obligations of a company that are due to be settled within one year or one operating cycle, whichever is longer.

Operating Activities

The day-to-day actions that involve the production, sales, and delivery of a company's product or service, generating most of the company's cash flows.