You Are Considering a Project That Costs $300 and Has

question 228

Multiple Choice

You are considering a project that costs $300 and has expected cash flows of $110, $121, and $133.10 over the next three years. If the appropriate discount rate for the project's cash flows is 10%,
What is the net present value of this project?

• A) ($8.58)
• B) $0.00
• C) $0.71
• D) $19.79
• E) $64.10

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Definitions:

Revenue Recognition Principle

An accounting principle that dictates the specific conditions under which revenue is recognized or recorded, ensuring it's captured in the period it is earned.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous accounting period, simplifying record-keeping.

Profit Margin

A financial ratio calculated as net income divided by revenue, expressing the percentage of each dollar of revenue that remains as profit.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.