A Project Has an Initial Cash Outlay of $29,500

question 104

Multiple Choice

A project has an initial cash outlay of $29,500. Cash inflows are estimated at $1,200, $6,900, $7,800, $9,500, and $4,800 for years 1 through 5, respectively. What is the net present value of this
Project given a 7% discount rate?

• A) ($5,677.15)
• B) ($5,314.82)
• C) ($2,618.03)
• D) $700.00
• E) $1,806.33

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Definitions:

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a product for which all sellers offer identical products.

Marginal Cost

The cost added by producing one extra item of a product.

Purely Competitive

Another term for pure competition, it refers to a theoretical market structure with a large number of buyers and sellers, homogeneous products, and free entry and exit from the market.