Which of the Following Amounts Is Closest to the Net

question 57

Multiple Choice

Which of the following amounts is closest to the net present value of a project that contributes $10,000 at the end of the first year and $5,000 at the end of the second year. The initial cost is $8,000 and the appropriate interest rate is 10%.

• A) $5,223
• B) $5,951
• C) $7,000
• D) $21,223
• E) $23,000

Understand the concept of indifference curves and their equations.

Analyze the effect of changes in consumption bundles on the slope of the indifference curve.

Identify how preferences influence the shape and slope of indifference curves.

Apply the concept of indifference curves to hypothetical consumer behavior scenarios.

---

Definitions:

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Implicit Interest Rate

The rate of interest implied in the lease payments or in other financial arrangements, not explicitly stated.

Residual Value

The estimated value of an asset at the end of its lease term or useful life.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an even manner.