What Is the Net Present Value of the Following Cash $$\frac { \mathrm { t } = 0 } { - 120,000 } \quad \frac { \mathrm { t } = 1 } { 300,000 } \quad - \frac { \mathrm { t } = 2 } { - 100,000 }$$

question 13

Multiple Choice

What is the net present value of the following cash flow at a discount rate of 11%?
$$\frac { \mathrm { t } = 0 } { - 120,000 } \quad \frac { \mathrm { t } = 1 } { 300,000 } \quad - \frac { \mathrm { t } = 2 } { - 100,000 }$$

• A) $69,108.03
• B) $231,432.51
• C) $80,000
• D) None of the above

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, used to assess the risk of loss from declining sales.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the amount of goods produced or the volume of sales, including labor and materials.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, highlighting the scalability of a company’s business model.