A Project Will Produce an Operating Cash Flow of $56,200

question 36

Multiple Choice

A project will produce an operating cash flow of $56,200 a year for 5 years. The initial fixed asset investment in the project will be $238,900. The net aftertax salvage value is estimated at $67,000 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 15.2 percent?

• A) −$20,627.54
• B) −$18,374.86
• C) $5,120.52
• D) $18,374.86
• E) $20,627.54

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Definitions:

Ecological Economists

Experts who study the relationship between ecological systems and economic systems, often focusing on sustainability and environmental impacts of economic decisions.

Environmental Economists

Experts who study the economic impacts of environmental policies and the cost-benefit analyses of preserving or degrading the environment.

Neoclassical Economics

An economic theory that focuses on supply, demand, and the price mechanism as the driving forces behind production, distribution, and consumption of goods and services.

Economic Systems

Organized ways in which countries manage their resources and distribute goods and services within their societies.