An Initial Investment of $400,000 Will Produce an End of Year

question 90

Multiple Choice

An initial investment of $400,000 will produce an end of year cash flow of $480,000. What is the NPV of the project at a discount rate of 20%?

• A) $176,000
• B) $80,000
• C) $0 (zero)
• D) None of the above

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Definitions:

Liabilities

Financial obligations or debts that a company owes to outside parties, which must be settled over time through the transfer of economic benefits.

Assets

Resources owned by a company that have economic value and can be used to meet debts or commitments.

Liability

A financial obligation or amount owed by a business or individual, arising from past transactions or events.

Asset

An item of value owned by an individual or corporation, expected to provide future benefits or value.