What Is the NPV of the Following Set of Cash

question 258

Multiple Choice

What is the NPV of the following set of cash flows if the required return is 14%?

• A) ($1,286)
• B) $3,034
• C) $9,525
• D) $10,376
• E) $41,410

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Definitions:

Factor Market

The marketplace for services of the factors of production (labor, capital, land, and entrepreneurship) where factors are bought and sold.

Price Takers

Individuals or companies who accept the prevailing prices in the market of their products without having the ability to influence them.

Marginal Productivity Theory

An economic theory suggesting that payment to factors of production equals the value of their marginal contribution to the production process.

Equilibrium Value

The price at which the quantity of goods supplied is equal to the quantity of goods demanded in a market.