A Project Costs $14 Million and Is Expected to Produce

question 8

Multiple Choice

A project costs $14 million and is expected to produce cash flows of $4 million a year for
15 years. The opportunity cost of capital is 20%. If the firm has to issue stock to undertake the project and issue costs are $1 million, what is the project's APV?

• A) $3.7 million
• B) $4.5 million
• C) $4.7 million
• D) $3.0 million

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Definitions:

Outer Cytoplasmic

Pertaining to the area of cytoplasm situated near the outer boundary of a cell.

Gas Filled Vacuoles

Structures within some cells that contain gas, which can provide buoyancy or maintain cell shape.

Pili

Hair-like structures on the surface of many bacteria that are involved in attachment to surfaces and in the transfer of genetic material.