Scott Enterprises Is Considering a Project That Has the Following

question 55

Multiple Choice

Scott Enterprises is considering a project that has the following cash flow and cost of capital (r) data.What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected. $$\begin{array} { l c c c c c } \mathrm { r } : & 11.00 \% \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\hline \text { Cash flows } & - \$ 1,000 & \$ 350 & \$ 350 & \$ 350 & \$ 350\end{array}$$

• A) $77.49
• B) $81.56
• C) $85.86
• D) $90.15
• E) $94.66

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Definitions:

Obama

The 44th President of the United States, serving from 2009 to 2017, and the first African American to hold the office.

McCain

Refers to John McCain, an American politician who served as a United States Senator and was the Republican nominee for President in the 2008 election.

Intrinsic Value

The inherent or true value of a financial asset, disregarding market factors and based solely on financial fundamentals and earnings potential.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset or security at a specified price within a certain period.