An Asset Is Purchased for $40,000

question 99

Multiple Choice

An asset is purchased for $40,000. It is expected to provide an additional $10,000 of annual net cash inflows. The asset has a 10-year life and an expected salvage value of $3,300. The hurdle rate is 10%. The present value of an annuity factor of 10% for 10 years is 6.1446. The present value of $1 discounted for 10 years at 10% is 0.3855. Given the data provided, the net present value of the investment is approximately:

• A) $62,718
• B) $22,718
• C) $21,446
• D) $0

---

Definitions:

Life Expectancy

The average period that a person may expect to live, often used as a measure of the health and well-being of populations.

Disability-Free

The state of being without any physical or mental limitations that inhibit daily activities.

Mortality Rates

A measure of the number of deaths in a particular population, scaled to the size of that population, per unit of time.

Hispanic Americans

Citizens or residents of the United States who are of Hispanic or Latino origin, representing a diverse range of cultures and backgrounds.