What Is the Net Present Value of a Project That

question 18

Multiple Choice

What is the net present value of a project that contributes $25,000 at the end of the first year and $12,000 at the end of the second year. The initial cost is $33,000. The appropriate interest rate is 7% for the first year and 10% for the second year.

• A) $1,579.44
• B) $559.90
• C) $281.85
• D) -$2,148.26

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Definitions:

Current Profitability

A measure of a firm's current financial performance, often assessed by examining current income and profitability ratios.

Emphasized

Highlighted or given special attention or prominence in a context or discussion.

Milling Machine

A machine tool used to shape solid materials by removing excess material with rotary cutters.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.