A Capacity Alternative Has an Initial Cost of $30,000 and Cash

question 107

Multiple Choice

A capacity alternative has an initial cost of $30,000 and cash flow of $20,000 for each of the next four years. If the cost of capital (i.e., interest rate) is 5 percent, the net present value of this investment is:

• A) greater than $80,000 but less than $110,000.
• B) greater than $110,000.
• C) less than $50,000.
• D) greater than $50,000.
• E) impossible to calculate, because variable costs are not known.

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Definitions:

Prosocial Behaviors

Actions intended to benefit others, such as helping, sharing, donating, and volunteering, indicative of empathy and social responsibility.

Cognitively Prepared

The innate potential in human beings to learn certain skills or acquire specific knowledge, suggesting readiness for cognitive development.

Maturational Processes

Natural growth and development sequences that occur in the human life cycle, influenced by genetic factors.

Associative Play

A stage of play development where children play alongside each other but not directly with each other, often observed in toddlers.