John Is Considering a Project with Cash Inflows of $1,750

question 100

Multiple Choice

John is considering a project with cash inflows of $1,750, $1,850, $2,000, and $2,550 over the next four years, respectively.The relevant discount rate is 14 percent.What is the net present value of this project if it the start-up cost is $5,000?

• A)$818.35
• B)$947.56
• C)-$600.00
• D)$693.61
• E)$379.75

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Definitions:

Journal Entry

A record of a business transaction in the accounting journal that shows the accounts and amounts debited and credited.

Merchandise Inventory

Goods a business has acquired to sell to customers but has not yet sold.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Certificate of Deposit

A savings certificate issued by a bank to a person depositing money for a specified length of time, typically earning a fixed interest rate.