A Firm Is Considering a Project with an Annual Cash

question 63

Multiple Choice

A firm is considering a project with an annual cash flow of $80,000. The project would have a 10-year life, and the company uses a discount rate of 8 percent. Ignoring income taxes, what is the maximum amount the company could invest in the project and have the project still be acceptable (rounded) ?

• A)$800,000
• B)$536,800
• C)$406,420
• D)$727,208

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Definitions:

Electroplating

A process that uses electric current to deposit a thin layer of metal onto a conductive surface, typically for protective, decorative, or functional purposes.

Pure

Refers to a substance that is not mixed with any other substance, having a homogenous chemical composition.

Ionization

The process by which an atom or a molecule acquires a negative or positive charge by gaining or losing electrons.

Important Factor

A significant element or aspect that contributes to a result or outcome.