The NPV (Net Present Value) of a Cash Stream That

question 30

Multiple Choice

The NPV (net present value) of a cash stream that is equal to $75 per period for 5 periods with a rate of return of 15% per period would be

• A) $261.37.
• B) $289.12.
• C) $312.74.
• D) $322.44.

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Definitions:

Differential Profit

The change in profit resulting from choosing one option over another in decision-making processes.

Fixed Expenses

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Variable Factory Overhead

Expenses in a factory that vary with the level of production output, such as utility costs and materials.

Fixed Costs

Expenses that do not change with the level of production or sales over the short term, such as rent or salaries.