Using a Required Rate of Return of 12 -What Is This Project's NPV If the Initial Capital Investment

question 98

Multiple Choice

Using a required rate of return of 12%.
$\begin{array} { | c | r | } \hline { \text { Perpetual Power Machine Co. - Purchase of a New High Machining Tool } } \\\hline \text { Year } & \text { Cash Flow } \\\hline \text { Year 1 } & \$ 500 \\\hline \text { Year 2 } & \$ 500 \\\hline \text { Year 3 } & \$ 3,000 \\\hline \text { Year 4 } & \$ 3,000 \\\hline \text { Year 5 } & \$ 10,000 \\\hline\end{array}$
-What is this project's NPV if the initial capital investment is $7,162?

• A) $3,399
• B) $12,000
• C) $8,500
• D) $3,000

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Definitions:

Fear of Failure

An apprehension or anxiety about not succeeding in a task or goal, which can sometimes inhibit a person's ability to take risks or pursue ambitions.

Positive Aspects

The beneficial or advantageous features of a situation, person, or object.

Unbalanced Relationship

A relationship where there is an unequal distribution of effort, emotion, or power between the parties involved.

Married Couple

Two individuals united by marriage, forming a legal and social partnership recognized by various institutions.