Use the Following Table $\text { Present Value of an Annuity of } 1$

question 14

Multiple Choice

Use the following table $\text { Present Value of an Annuity of } 1$$\begin{array}{rrrr}\text { Period } & 8 \% & 9 \% & 10 \%\\1 & .926 & .917 & .909 \\2 & 1.783 & 1.759 & 1.736 \\3 & 2.577 & 2.531 & 2.487\end{array}$ A company has a minimum required rate of return of 9%. It is considering investing in a project which costs $420000 and is expected to generate cash inflows of $168000 at the end of each year for three years. The net present value of this project is

• A) $425208.
• B) $252000.
• C) $5208.
• D) $42516.

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Definitions:

Process Costing

A costing method used when nearly identical products are produced through continuous processes, allocating costs based on process departments.

Journal Entries

The records of financial transactions in the double-entry bookkeeping system, where each transaction is noted in two accounts (debit and credit).

Transactions

Financial events that affect the assets, liabilities, and equity of a company recorded in its accounting system.

Conversion Costs

The combined costs of direct labor and manufacturing overheads required to convert raw materials into finished goods.