A Project Will Produce Cash Inflows of $1,750 a Year

question 177

Multiple Choice

A project will produce cash inflows of $1,750 a year for four years. The project initially costs $10,600 to get started. In year five, the project will be closed and as a result should produce a cash inflow of
$8,500. What is the net present value of this project if the required rate of return is 13.75 percent?

• A) ($5,474.76)
• B) ($1,011.40)
• C) ($935.56)
• D) $1,011.40
• E) $5,474.76

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Definitions:

Cognitive Explanation

An understanding or interpretation focusing on mental processes such as perception, memory, and reasoning.

UCS

An abbreviation for Unconditioned Stimulus, a stimulus that naturally and automatically triggers a response without prior conditioning.

Instinctive Behaviour

Inborn, automatic responses to specific stimuli that are not learned but rather naturally occur in all members of a species.

Conditioning

The process of learning associations between environmental stimuli and behavioral responses, often distinguished as classical or operant conditioning.