Cheryl Peck Purchased a Computer Network for Her Classroom

question 6

Multiple Choice

Cheryl Peck purchased a computer network for her classroom. The computer network cost $100,000. She estimates that she can charge $500 for one session in the classroom. Cheryl knows that enrollment will increase over time. She estimates 50 students the first year, 75 students the second year, 100 students the third year, and 150 students the fourth year. If her cost of capital is 12 percent, what is the approximate net present value of her investment?

• A) $35,471
• B) $19,156
• C) $87,500
• D) Cannot tell without more information.

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Definitions:

Correlational Study

A research method that examines the relationship between two or more variables to determine if a change in one is associated with a change in others.

Retrospective Study

A research design that looks back in time to analyze data from past records to investigate a particular outcome or phenomenon.

Prospective Study

A research design that follows participants forward in time to examine the relationship between specific exposures and outcomes.

Clinical Trial

A research design that tests the effects of medical treatment. Many clinical trials are randomized controlled trials that allow researchers to determine whether a new treatment is or is not effective.