Red Lake Mines Inc

question 94

Multiple Choice

Red Lake Mines Inc. is considering adoption of a new project requiring a net investment of $10 million. The project is expected to generate 5 years of net cash inflows of $5 million per year. In the project's sixth and final year, it is expected to have a net cash outflow of $1 million. What is the project's net present value, using a discount rate of 12%?

• A) about $8.52 million
• B) about $8.00 million
• C) about $7.52 million
• D) None of these are correct

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Definitions:

Convex Surface

A curved surface that bulges outward, resembling the exterior of a sphere or circle.

Concave Depression

A rounded or hollowed-out area on a surface or body part, often involved in joint articulation.

Synovial Membranes

Specialized connective tissue that lines the inner surface of capsules of synovial joints and tendon sheaths, facilitating smooth movement.

Bursae

Small fluid-filled sacs located between bones and soft tissues, reducing friction and cushioning joints.