A Project Requires an Investment of $900 Today

question 44

Multiple Choice

A project requires an investment of $900 today. It has sales of $1,100 per year forever. Costs will be $600 the first year and increase by 20% per year. Ignoring taxes calculate the NPV of the project at 12% discount rate.

• A) $65.00
• B) $57.51
• C) $100.00
• D) Cannot be calculated as g > r

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Definitions:

Mark-up on Cost

It is the amount or percentage added to the cost price of goods to cover overhead and profit.

Future Shop

A now-defunct Canadian electronics retailer that was absorbed by Best Buy.

Normal Retail Price

The standard selling price of a good or service in the retail market before any discounts or promotions are applied.

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Electronic devices that execute specific tasks based on programmed instructions, capable of processing, storing, and retrieving data.