DiplomatCom Is Considering a Project That Has an Up-Front Cost

question 3

Multiple Choice

Diplomat.com is considering a project that has an up-front cost of $3 million and is expected to produce a cash flow of $500,000 at the end of each of the next 5 years. The project's cost of capital is 10%.
-Based on the above data, what is the project's net present value?

• A) -$1,312,456
• B) -$1,104,607
• C) -$875,203
• D) $105,999
• E) $321,788

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Definitions:

Complex Activity

An activity involving multiple, often interrelated steps or processes that require a high level of skill, knowledge, or coordination to complete successfully.

Coordination

The organized arrangement or harmonious functioning of parts for effective results, often involving the integration of efforts among members of a group or organization.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Cohesive Group

A group characterized by unity and strong bonds among its members, leading to higher levels of cooperation and collective action.