What Is the Minimum Cash Flow That Could Be Received

question 122

Multiple Choice

What is the minimum cash flow that could be received at the end of year three to make the following project "acceptable?" Initial cost = $100,000; cash flows at end of years one and two = $35,000; opportunity cost of capital = 10 percent.

• A)$29,494
• B)$30,000
• C)$39,256
• D)$52,250

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Definitions:

Equipment Depreciation

The systematic allocation of the cost of physical assets used in production over their useful lives.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a particular period or project.

Other Expenses

Costs not directly related to the primary business activities, such as interest expense or losses from asset sales.

Spending Variance

The difference between the actual amount spent and the budgeted or forecasted amount, often analyzed for cost control purposes.