The Neils Corp

question 139

Multiple Choice

The Neils Corp. is considering making an investment in a project of $10,000,000. It expects to receive six payments of $2,500,000 each. Its discount rate is 6%. A table shows that the present value of an annuity of six payments of $1 each, at 6%, has a value of 4.91732. The net present value of this investment opportunity is approximately

• A) Zero
• B) 2293300
• C) 5000000
• D) 12293500

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Definitions:

Supply Curve

A visual chart that illustrates how the price of a product correlates with the amount suppliers are prepared to manufacture and sell.

Cost Of Production

The total expense incurred in manufacturing a product or providing a service, including labor, materials, and overhead.

Consumer Taste

The preferences and expectations of consumers regarding products and services, which can influence their buying behavior.

Price Ceilings

A government-imposed limit on the price charged for a product to prevent prices from rising to a certain level above equilibrium.