A Project Costs $15 Million and Is Expected to Produce

question 5

Multiple Choice

A project costs $15 million and is expected to produce cash flows of $3 million a year for
10 years. The opportunity cost of capital is 14%. If the firm has to issue stock to undertake the project and issue costs are $500,000, what is the project's APV (approximately) ?

• A) -$352,000
• B) $148,350
• C) $648,350
• D) $952,000

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Definitions:

dB

A unit of measurement that indicates the relative loudness of sounds in terms of the logarithmic scale, with higher numbers representing louder sounds.

Amplitude

Stimulus intensity; in audition, roughly equivalent to loudness, graphed by the increasing height of a sound wave.

Loudness

Loudness is the subjective perception of the intensity of sound, often measured in decibels, influencing how sound is experienced.

Frequency

The number of occurrences of a repeating event per unit of time, often used in the context of waves or cycles.