A Project Has the Following Cash Flows: C0 = -100,000;

question 31

Multiple Choice

A project has the following cash flows: C0 = -100,000; C1 = 50,000; C2 = 150,000; C3 =
100,000. If the discount rate changes from 12% to 15%, what is the change in the NPV of the
Project (approximately) ?

• A) 12,750 increase
• B) 12,750 decrease
• C) 122,650 increase
• D) 135,400 decrease

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Definitions:

Finance Charges

Fees represented as the cost of credit to the borrower, which includes interests and other charges.

Installment Payment Plan

A financial arrangement that allows a buyer to pay for goods or services over a period of time in several smaller payments.

Bankruptcy

The state of being bankrupt, being legally declared unable to pay debts; a petition to a court by an individual who is stating that he or she cannot pay any debt incurred.

Collection Agency Transaction

A financial activity where a collection agency attempts to recover funds owed by an individual or business.