You Are Considering the Purchase of an Investment That Would

question 14

Multiple Choice

You are considering the purchase of an investment that would pay you $5,000 per year for Years 1-5, $3,000 per year for Years 6-8, and $2,000 per year for Years 9 and 10. If you require a 14 percent rate of return, and the cash flows occur at the end of each year, then how much should you be willing to pay for this investment?

• A) $15,819.27
• B) $21,937.26
• C) $32,415.85
• D) $38,000.00
• E) $52,815.71

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Definitions:

Net Present Value

A financial metric that calculates the value of a series of future cash flows in today's dollars, factoring in both the time value of money and the risk of those cash flows.

Lease Cost

Lease cost refers to the expense incurred by leasing property or equipment, including monthly payments, maintenance, taxes, and other associated fees.

Rate of Return

The increase or decrease in value of an investment during a particular time frame, represented as a percent of the investment's initial cost.

Supply Chain Network Design

The process of defining a supply chain's structure, including the selection of locations for production, storage facilities, and transportation routes.