A Project Will Cost $20,000 and Is Expected to Return

question 32

Multiple Choice

A project will cost $20,000 and is expected to return $22,000 next year. Your marginal tax rate is 30%. One-year taxable bonds that have similar risk to the project are yielding 9%.
Similar-risk municipal bonds are yielding 6%. What is the NPV of this project? Round your
Answer to the nearest dollar.

• A)-$367
• B)$132
• C)$189
• D)$183

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Definitions:

Reasonable Assurance

A level of confidence or certainty in the effectiveness of an organization's controls, processes, or systems, without guaranteeing absolute assurance.

Vulnerabilities

Weaknesses in a system or security setup that can be exploited by threats.

Customer's Note

It is a formal promissory note or debt instrument where the customer promises to pay a specific sum of money to the issuer, often used in business as a form of short-term financing.

Bank Statement Adjustment

The process of amending the balance in a company's record of its bank account to match the balance reported on the bank statement, often involving adding or subtracting items like checks or bank charges.