A Once in a Lifetime Project Requires an Immediate Outlay

question 15

Essay

A once in a lifetime project requires an immediate outlay of $100 000 and $25 000 at the end of each year for 3 years. Net returns are nil for the first 3 years and $30 000 per year thereafter for fourteen years. What is the net present value of the project at 16%?

---

Definitions:

Marginal Utility

The extra pleasure or advantage (utility) a person receives from using an additional unit of a product or service.

Marginal Utility

The additional satisfaction or benefit received from consuming one more unit of a good or service.

Movie Rental

The practice of paying a fee to borrow a film for a limited period, traditionally through physical stores, or digitally via online platforms.

Choice Set

The collection of all possible options available to a consumer when making a decision.