A Project Will Cost $50,000 Initially, and Is Expected to Return

question 55

Multiple Choice

A project will cost $50,000 initially, and is expected to return $25,000 in years 1 and 2, -$20,000 in year 3, and $25,000 in years 4 and 5. Calculate the project's NPV if the appropriate cost of
Capital is 20%. Round your answer to the nearest dollar.

• A)+$28,010
• B)-$1,276
• C)-$2,247
• D)+$21,872

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Definitions:

Installment Account

A credit account where the borrower repays the principal and interest in regular, scheduled payments.

Line of Credit

A flexible loan arrangement with a financial institution that allows a borrower to draw funds up to a specified limit as needed.

Outdoor Advertising

Advertising that reaches consumers while they are outside their homes, including billboards, transit posters, and digital signage.

Repeated Exposure

A marketing strategy that involves presenting a product, service, or brand to the target audience multiple times to increase familiarity and favorability.