What Is the NPV of a Project That Costs $100,000

question 122

Multiple Choice

What is the NPV of a project that costs $100,000, provides $23,000 in cash flows annually for six years, requires a $5,000 increase in net working capital, and depreciates the asset at 15 percent declining balance over six years and sold at zero salvage value? The discount rate is 14 percent.The tax rate is 40 percent.

• A)-$23,460
• B)-$13,283
• C)$13,283
• D)$44,866

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Definitions:

Centered Moving Average

Centered Moving Average is a calculation used to smooth out data series by averaging consecutive subsets of data points centered around each point, often used in time series analysis.

Least Squares

A mathematical method used in regression analysis to find the best-fitting line through a set of data points by minimizing the sum of the squares of the vertical distances of the points from the line.

Time-Series Data

Data points collected or recorded at time intervals, allowing analysis of patterns, trends, and forecasting.

Trend Equation

A mathematical formula that fits a line to a set of data points in a way that best expresses the relationship and tendency over time.