A Project Has an Initial Investment of $10,000, with $3,500

question 327

Multiple Choice

A project has an initial investment of $10,000, with $3,500 annual inflows for each of the subsequent four years. If the required return is 15%, what is the NPV?

• A) ($435.26)
• B) ($32.48)
• C) ($7.58)
• D) $4.63
• E) $5.49

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Definitions:

Installments

A method of payment where the total cost is divided into smaller, periodic payments over a set period of time.

Small Business Administration

A U.S. government agency that provides support, resources, and loans to small businesses.

Loan

Money borrowed that is expected to be paid back with interest, typically used for larger purchases or to bridge temporary financial gaps.

Cash-flow Method

A financial analysis approach that evaluates an investment's profit or loss by considering the timing and amount of cash inflows and outflows.